Around 15 million people, or a third of all workers, are not saving towards their retirement, and the state pension is not enough to maintain their living standards, the UK’s top financial regulator has warned.
Andrew Bailey, the boss of the Financial Conduct Authority said that only 7 per cent of people aged 55 to 64 today expect to live to 90, but the FCA’s research indicates that half of them will actually live that long.
This has a “big impact on financial planning”, he said, and means that many people are not saving enough for their retirement.
“While the state pension is a hugely important part of retirement provision in this country, for many people it is not enough to maintain living standards,” Mr Bailey wrote in the Daily Mirror.
New research by the FCA suggests that millions of people could have to work into their seventies or eighties if they want to maintain their living standards
The full state pension is £159.55 per week, although the actual amount a person receives depends on the National Insurance contributions they have made over their lifetime.
The amount is currently protected from the effects of rising prices by the “triple lock”, which guarantees that payments increase by whichever is the highest out of inflation, average earnings or 2.5 per cent.
Mr Bailey’s warning comes as the regulator publishes a survey of 13,000 people about their retirement savings.
Though the research shows that many people are not putting aside enough money for retirement, it also demonstrates that there have been some positive changes made to the pension system, notably auto-enrolment rules introduced between 2012 and 2017. These have made it mandatory for employers to sign full-time workers up to a pension scheme, unless those staff opt out.
Tom McPhail, head of retirement policy at Hargreaves Lansdown described auto-enrolment as an “incredible success”, which has helped eight million people start saving for retirement.
“However, millions more have been left behind,” he warned.
Low earners, the young, part-time workers, the self-employed and people working past retirement age all risk missing out on the “generous” top-ups available, Mr McPhail said.
“The sooner the benefits of this fantastic system can be extended to help more of the population, the better.”
“Neither the Government nor the regulator has any kind of clear policy to encourage more saving and investing; it isn’t even part of the FCA’s statutory objectives.”