Government supports Norwich Union research on retirement

Article date: 27 September 2005

  • Department for Work and Pensions minister interestedin Norwich Union for research

Commenting on Norwich Union’sextensive research on the public’s attitude to working longerand saving more, Stephen Timms MP, minister of state, Departmentfor Work and Pensions, said: “The Norwich Union research is auseful contribution to the National Pensions Debate, shedding lighton people's attitude towards retirement - including retirement age.The National Debate, involving both public and industry, is helpingus shape a pension system which everyone can have confidencein.”

The research shows that many people want toretire earlier than they will be able to afford.

One of the most unrealistic groups is 25-34 year olds who, onaverage, hope to retire at 59, six years early than the stateretirement age. Yet nearly 60% of these are planning on savingcloser to the time. Figures from Norwich Union show that delayingthe start of a pension by five years, requires almost half as muchagain in contributions to reach the same level of income.

Starting retirement planning at 30 with a payment of £100 permonth is worth nearly £4000 extra pension per year than the payingthe same amount per month from age 35.

Iain Oliver, head of pensions at Norwich Union, said: “Theearlier people choose to retire the less income buying power theirretirement savings have. For example, at 60, a fund of £100,000buys an income of £4,320 but at 70 it buys £5,950.

"If you want to retire at 60 or before then youneed to increase your contributions and start early”.

-ends-

Press contacts:
Cheryl Cox 01904 452617 / 07800 695 275
James Evans 01904 452791 / 07800 699 525

Notes toeditors:
Stephen Timms MP will be speaking at a Norwich Union sponsoredfringe event, entitled “Working towards a pensionsconsensus”, at the Labour party conference at 12.45pm onTuesday 27 September at the Queens Hotel, 1 Kings Road, Brighton.If you would like more details please contact the press office.

Figures
Source: Norwich Union

  1. Client starts saving £100pm at age 30 and retires at 65.Initial Income is £11,800. Client 2 starts saving at 35 andretires at 65. Initial income is £7930. To make up the differencethe client would have to save £148.80 per month.
  2. £1 income from age 70 costs the same as 84p from age 65 or 73pfrom age 60. £100,000 at age 60 would give a pension of £4,320 peryear. At 65 this figures moves up to £5,020, and at 70 it is£5950.

60

65

70

£100,000

£100,000

£100,000

£4,320

£5,020

£5,950

Assumptions based on FSA projection assumptions: all annuitiespaid monthly in advance, five year guaranteed funds and increasingat 3% per annum. All annuities are monetary amounts.

Research
The research was carried out by ICM Research on behalf of NorwichUnion. ICM surveyed 1,000 adults aged between 18 and 70(non-retired). It also included mixed gender focus groupdiscussions, BC1CD status, mix of working, semi-retired and retiredwith varying levels of financial sophistication. The research usedboth quantitative and qualitative methods.

Norwich Union
Norwich Union is one of the UK's biggest insurers. It is a leadingprovider of life, pensions and investment products and one of thelargest Financial Adviser (FA) providers.

Norwich Union has strategic alliances with building societiesand other leading UK brand names including CIS and The Royal Bankof Scotland Group. Norwich Union’s news releases and aselection of images are available from Aviva's internet presscentre at www.aviva.com/media

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