Get online to understand your pension
In May, Andrew Haldane – Chief Economist at the Bank of England – delivered a speech where he said “I confess to not being able to make the remotest sense of pensions”.
Hardly an encouraging sign. But recent insight from Aviva however reveals that many savers are going online to get a better understanding of their retirement savings. Maybe Mr Haldane should follow their lead.
Since summer 2014, more than 200,000 people have used Aviva’s free online retirement planner to help take control of their financial future.
The average age of the user is 46 – two years younger than Mr Haldane. Half (50%) of users were aged between 30 and 50, suggesting this is when we engage most with our retirement plans. A further 40% were aged over 50, as they approached their actual retirement. Less than 10% were under 30, highlighting a gap among younger savers.
Are we expecting to retire too soon?
There’s also evidence that more needs to be done to encourage a longer working life. While the over-50s targeted a retirement age of 63, the under-30s targeted the age of 64. This is a small step in the right direction, but we probably need to go further. It’s likely that the younger generation should not expect to receive their state pension before the age of 70.
Regardless, the 200,000 users should be congratulated. Taking control is the first step towards achieving our retirement ambitions.
You can access Aviva’s online Retirement Planner here - http://www.aviva.co.uk/retirement/tools-and-calculators/my-retirement-planner/
Are we sleep walking towards retirement?
New research from Aviva found that one in four of us never review our pension savings. And one in five review our pensions less than once every five years. Can we really be so confident that everything is under control?
This lack of interest appears to be stronger amongst women than men. One in three women told us they never reviewed their pension savings, compared to one in four men.
When asked what had encouraged people to review their savings, the most popular answer was that they had recently received their annual pension statement. This was followed by a pay increase and then a change of job.
It need not be a daily or weekly occurrence, but an annual check-up could be the difference between hitting or missing our retirement goals. The annual statement should confirm how much you’ve saved into your pension so far, and give you an indication of the potential size of this pension pot at retirement. This information will help you consider whether you’re on track.
It needn’t be hard to check how you’re doing
You can take advantage of a variety of easy-to-use online tools which can help you review and analyse your pension information. These include Aviva’s free Retirement Planner.
If you’re one of the many who have not reviewed your retirement savings in recent years, now would be a good time to begin.
The booming baby boomers
New data from the Office for National Statistics gives us fresh insight into the changing ages of society across England. The May data showed that the population aged 65 and over – often referred to as the ‘baby boomer’ generation – is projected to grow at the fastest rate compared with other age groups in every region of England.
Across England as a whole, during the next decade the population aged 65 and over is expected to grow by 20.4%. This compares to just 8.7% for people the group aged 0 to 15, and only 3.6% for the group aged 16 to 64.
In addition, the number of local authorities in England where more than a quarter of the population are aged 65+ is projected to increase from 28 out of 326, in mid-2014, to 84 authorities in mid-2024.
The fastest growth in those aged 65 or more is seen in London, where the number is projected to increase by 23.6%. This would result in an increase from slightly under 1 million to 1.2 million over the 10 year period.
Our longer lives are to be celebrated. But increased longevity raises the need for all of us to make sure we’re saving enough to support our longer lives in retirement. By saving more today, we’ll all be better placed to thrive – not just survive – in later life.
400,000 people better informed about their state pension
The British state pension has long been reputed to be one of the oldest, yet most confusing, state pension systems in the world. For many of us this meant we were being asked to plan for our retirement on a foundation of confusion. But now, at long last, the situation is changing.
Recognising the problem, the government launched a new state pension in April 2016. We’ve now entered into what will be a considerable period of transition from the old system to the new, but once things have settled down the confusion will surely be reduced. It should become easier for us to understand how much we’ll receive from the state in retirement.
We covered this subject in more detail in our article on The new single state pension.
We also encouraged people to request a free pension statement from the government, to help them to get a better indication of how much they can expect to receive from the state. Recent evidence indicates that this message has been heard, with a 40% increase in demand for statements in the past 6 months. That’s more than 400,000 in total. Great news!
Wondering how much you might receive?
Anyone over the age of 18 can access information about their state pension by using the government’s free online service. It provides a personalised estimate of what you may receive when you reach state pension age, based on your national insurance contributions records.
You can access this free service on the Get a State Pension statement page of the GOV.UK website.