One in four over 40s have no pension

Nearly one in four (24%) of those aged 40 to 75 do not have a private pension, according to the Department for Work and Pensions (DWP)

The Planning and Preparing for Later Life survey found that while most people had started saving for retirement, 24% of 40-75 year olds did not have a private pension, and 16% had not yet started saving.
Only 23% had an idea of the amount they would need to save for retirement, with the majority unsure.
People on lower incomes were less likely to have started saving for retirement. Around 32% of those with incomes of less than £10,500 had not yet started saving compared to just 1% of those with incomes of £44,000 or more.

People with higher incomes were more likely to expect to retire before the current state pension age (SPa), which is 65. For example, 54% of those with gross earnings of £44,000 a year or more expected to retire before the current Spa compared with only 36% of those earning below £10,500.

Similarly, people with savings over £100,000 were more likely to expect to retire before the Spa (15%) than those with no savings or those with savings under £15,000 (34%).
The survey provided evidence on how far individuals can make well-informed decisions about how and when to retire and whether they will be in a position to enjoy financial security when they do.
Many respondents reported being unable to afford to make contributions to their pension, with 53% currently without one.
In response to the data, the DWP said: ‘The question of whether and how people are planning for retirement is becoming ever more important as people live longer and have greater freedom over when and how they retire and take their pensions.’

Most people had made at least some provision for ensuring they have an income in retirement, with 63% having started saving by their 30s. Around three in four (76%) of 40 to 75 year olds had a private pension.

However, those currently on low incomes are likely to be particularly financially vulnerable in retirement, often requiring further support.

Not being able to afford to make contributions was the most common reason for not having a pension.

Those who had not yet retired (62%) expected to continue in paid work beyond their ideal retirement age. Currently, 14% of respondents aged 66 to 70 remain in employment and 5% of those are over 70.
Factors to help them work longer included flexible working and the potential to work fewer hours as they approach retirement.

Self-employed respondents stated they were less likely to save for retirement (65%), expecting to retire later than those in employment.

Reasons for this included financial security and enjoying the flexibility their self-employment afforded.

Around one in 10 (11%) respondents were currently self-employed in some capacity and as many as 29% had experienced a period of self-employment at some point in their career.
The research was commissioned by the DWP and was carried out by the National Centre for Social Research (NatCen). Data was collected from 2,655 40 to 75 year olds across the UK between November 2020 and February 2021.

For more information, the DWP Planning and Preparing for Later Life report can be found here.

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CAUTION: The above-mentioned write-up is extracted from various professional journals and articles including HMRC guidance notes where relevant.