Cost of living causing half of working adults to change their retirement plans

28th February 2024 by RetireEasy

A new study, from the Pensions Management Institute (PMI), shows that almost a quarter (24%) of people think they will have to delay their retirement and a further 23% have reduced their pension contributions.

One in 20 people questioned (5%) say they have stopped making pension contributions entirely.

The PMI is the professional body that supports and develops the experts who run UK pension schemes, and their survey also revealed some other significant stats and trends on retirement saving. For example, two-thirds of those surveyed felt they did not have the knowledge required to choose their pension provider.

The significance of this, says PMI, is that implementing the government’s recent proposals for consolidating pots would first require improving savers’ financial and pension education so they could make an informed choice.

Savers’ preferences for future retirement income were also covered by the survey. While some 58% of respondents said they planned to take retirement benefits totally or mainly as an income, only 25% were interested in taking their pension savings totally or mainly as cash.

Moreover, some 81% of respondents valued a retirement income that would be guaranteed for life, with two-thirds preferring an income that kept up with price inflation.

PMI Council member Tim Box said: “Our research shows the concerns that many people have about how well they can prepare for retirement. With only 30% of our respondents believing that the state pension will be more than half of their retirement income, the role of private pension provision to fill the gap is critically important.

“If the state pension age is to be raised to 71, as has recently been speculated about, then private pension savings are likely to be the only source of income between stopping work and the commencement of the state pension for a huge swathe of those born after 1970.

“These additional statistics show that it is vital that the government ensures that savers are given appropriate support and education to save for retirement in an era when it is likely that state pension benefits will only become available in an individual’s eighth decade.”

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