All work and no play – one in three Brits don’t plan to give up work when they reach retirement age

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For immediate release: Monday 5 November 2012

  • BUT Brits can turn this around with a contribution of 8% which could give you c.42% of your salary when you retire1

A survey2 from NOW: Pensions, the workplace pension provider, reveals that retirement is no longer a rosy prospect for millions of Brits, with one in four (27%) believing that they will face a shortfall in their pension savings.

Whilst stock market turmoil and low interest rates can be partly blamed for this shortfall, the survey also shows that over one third (35%) of Brits are simply not contributing to any kind of savings thereby creating a huge deficit when it comes to retirement. Such a shortfall means that Brits are going to have to supplement their income in some other way or give up the dream of retiring altogether.

According to the survey:

  • One in four (27%) of Brits are not on track to retire due to a shortfall in their pension savings
  • This means that 1 in 3 (31%) Brits don’t plan to give up work entirely once they retire, with this figure rising to 41% for the over 55s
  • Two in five (41%) expect to take a part-time job in retirement to make up for the shortfall of their savings, whilst 1 in 5 (20%) Brits don’t expect to retire at all
  • Only half (47%) realise that the onus falls on them when it comes to ensuring that they have sufficient income in retirement,  and 15% still believe the state will fund their retirement
  • So what would it take for the nation to save more? Two points stand out – half of consumers say that they would need reassurance of stable returns and four in ten (43%) would need to know that that their pension provider was trustworthy.

“Our research clearly shows that auto-enrolment is vital if we want to get people saving,” says Morten Nilsson, CEO of multi-employer trust NOW: Pensions.  “With the current shortfall in pension savings, coupled with the fact that we are all living longer, there is a genuine risk that a large proportion of the population could face a poor future once they retire.  Doing nothing is not an option anymore if people want to retire on a reasonable income.”

Morten Nilsson continued: “We are confident that the introduction of auto-enrolment will get people saving, some for the first time. We also hope that the new rules will dispel the ‘live now, save later’ attitude which is inherent in our society.  Our calculations show that if an average earner saves into a cost efficient pension which has good investment governance then a contribution of just 8% towards their pension each year for 43 years, along with the state pension, could give them c.42% of their salary when they retire, and this is even higher for lower earners.”

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Based on a 25 year old saving into a pension for 43 years and 8% contributions on a starting salary of £26,000 p.a. (UK average salary); with real annual salary growth of 0.82% and real annual fund growth of 2.42% and a single life level annuity with no guarantee + basic state pension opf £107.45 per week.

1. He/she would get c£10,980 in today’s terms = 42.2% replacement ratio.
2.  Opinium Research carried out an online poll of 2,033 UK adults from 16 August to 21 August 2012

For further information:

Shirley Hatherton / Jennifer Stevens / Maddy Morgan Williams
Lansons Communications
Tel: +44 207 294 3615 / +44 7711 142 147

Notes for editors:

NOW: Pensions

NOW: Pensions is a multi-employer trust. The investments are managed by NOW: Pensions Investments, a subsidiary of ATP in Denmark, and the administration is carried out by Paymaster, an established UK third party administrator.

The NOW: Pension Trustee Directors, whose role is to safeguard the interests of members, comprises well-known industry figures with different areas of expertise:

  • Nigel Waterson, former Shadow Pensions Minister
  • Imelda Walsh, former Group HR Director of Sainsbury’s
  • John Monks, member of House of Lords and former General Secretary of ETUC and TUC
  • Christopher Daykin, former Government Actuary
  • Lars Rohde, CEO of ATP Group
  • Win Robbins, former Head of European Fixed Income at Barclays Global Investors

NOW: Pensions is committed to developing a better workplace pension provision in the UK by offering a simple, systematically risk managed, cost efficient and high performance pension product that delivers better retirement savings for UK employees. With over 45 years’ experience providing Denmark’s working population with stable and consistent pensions returns, NOW: Pensions is set to transfer the knowledge acquired in Denmark to the UK pension market. Charges are just £1.50 per month administration charge (reduced administration charge of £0.30 – £1.00 to be applied during auto enrolment phasing for lower earners) plus a 0.3% annual product investment management charge, with no hidden charges.

The ATP Group

Arbejdsmarkedets Tillaegspension (ATP) / Danish Labour Market Supplementary Pension is a statutory pension fund. It was established as an independent entity in 1964 with the objective of ensuring a greater retirement income for the Danish population. ATP has since developed to become the largest pension fund in Denmark. Together with the tax-financed basic state pension, ATP provides basic income security in old age for the Danish population.

ATP covers almost the entire Danish population representing 4.7 million members and 160,000 employers. In addition to the ATP Scheme, the ATP Group administers a number of pension and social insurance schemes, including several for the Danish state.

The ATP Group total assets under management amounted to DKK 693 billion/approximately GBP 74bn (i.e. assets: DKK 611 billion/GBP 64.5 billion + reserves: DKK 82 billion/GBP 9bn) at 30 September 2012. ATP invests in a wide variety of assets globally. Investment categories are broadly: equities, interest rates, credit, inflation and commodities.

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NOW: Pensions has a good technical infrastructure combined with a pension product suitable for our team. We couldn’t be happier with NOW: Pensions.
Martin Woods,