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UK consumers must “get to grips” with their pensions or end up failing to save enough to fund their retirement, industry figures have warned.
Only one-third of UK savers feel confident they can afford to retire, according to a survey by financial services company Hargreaves Lansdown.
At the same time, less than 40 per cent feared they had failed to set enough money aside, while 26 per cent were unsure.
“Many of us contribute to our pensions every month, but don’t really think about what we have and what that might give us in retirement,” said Helen Morrissey, head of retirement analysis at Hargreaves Lansdown.
“It’s led to a crisis of confidence. It’s important to get to grips with your pension situation.”
She added that it is also important for savers to consider what they want their “retirement to look like” when deciding how much to invest. They should consider what they plan to spend their money on and whether it falls within their budget.
The cost of a moderate retirement currently stands at £31,700 a year, according to the Pensions and Lifetime Savings Association, while those seeking a comfortable retirement would need £43,900 a year per person.
Zoe Alexander, director of policy and advocacy at the PLSA, said changes in how retirees live and the increased cost of living mean many need more money to meet their spending needs than they used to.
Consequently, savers should take into account the state of their pension to achieve peace of mind, making sure enough is being saved or work out what to do “to make up the shortfall” if they are saving less than required.
One problem involves consumers who have had several jobs over the course of their career. These people often lose track of one or more pensions, meaning they could lose out on thousands of pounds.
Morrissey encourages savers to locate even the smallest of pensions as well as considering consolidating them, which helps in managing savings more efficiently.
However, almost one quarter of UK consumers saw no benefit in consolidation, while more than 20 per cent were unaware of how to do so, according to recent research from Interactive Investor, an investment platform.
In addition, it is important for those entitled to a state pension to ensure that gaps in national insurance records are noted, including when out of work or living abroad. If a person has qualified for benefits during one of these gaps they may be able to claim money to plug pension holes.
“Once you have an idea of what you want, you can work out what it will cost, and then you can put a plan in place to get you there,” Morrissey concluded.
The Hargreaves Lansdown survey, carried out by research group Opinium, interviewed 1,500 people in April.
