A survey by ComRes, commissioned by BBC One’s Inside Out programme (BBC One, Monday 15 September, 7:30pm), found that 48% of Britons between the ages of 18 and 60 do not have a private pension.
39% of respondents said the primary reason they did not have a private pension was because it was unaffordable.
The second most common reason (28%) was the belief held by many people that they were simply “too young” to think about investing in a private pension. This was particularly prevalent among those aged 18-24 (72%) compared to only 2% of 45-54 year-olds.
The poll also revealed clear variations between different sections of society. 67% of adults on higher incomes were investing in one or more private pensions, compared to only 31% of Britons in the lower-income brackets.
14% said private pensions were “too confusing” and 6% said they would be able to manage on the state pension alone.
Worryingly for the pensions industry, 21% said they were more inclined to invest their money in other areas, such as property and savings accounts. 18% said they didn’t trust private pension providers and 14% felt that they would not get enough return on their investment.
Tom Mludzinski, Head of Political Polling at ComRes, said:
“With auto-enrolment being rolled out, this poll reveals some of the problems people perceive to exist around pensions. Clearly a significant section of the British population feel they are either unable or reluctant to invest their money in this way.
“There is a clear sense that many Britons feel disempowered with regard to private pensions – whether economically or through a lack of knowledge or trust.”
Pensions expert, Dr Ros Altmann, said: “The main message has to be – if you don’t save for your later life, what are you going to live on?
“The state pension, certainly for those who are relatively young now, is changing dramatically, and from 2016 onwards younger people will know that when they get to retirement the state pension is going to be around £20 a day.
“Now if you think you’d be happy living on £20 a day for the rest of your life when you’ve reached retirement, fine, don’t do anything. But if you think you might want more than £20 a day to have a decent lifestyle, then unless you do some saving now you won’t have any money coming in from that pension later.”
The survey comes soon after the coalition government launched their new workplace pensions auto-enrolment initiative. Changes means that employers must automatically enrol workers into a workplace pension. The new law applies to all workers between the age of 22 and state pension age who are earning more that £10,000 a year.
However, workers can opt-out of the scheme after they have been enrolled, but will lose out on their employer’s pension contributions.
Pensions Minister Steve Webb said:
“The first thing we’ve got to do is get millions of people into a pension at all – particularly starting with young people. And then we’ve got to build on that basic minimum level.”
He added: “In the past too many people have been ripped off frankly with pensions. These new workplace pensions will be different because we are going to cap the charges. From next April more than 99p in the pound – that you put into a pension – will go into the pension, not into charges.
“They will be the best value pensions, particularly because your firm is putting money in as well – one of the best things you can invest in.”