Only one in three people aged 45 to 54 say they have given ‘a great deal of thought’ to how they will manage in retirement, research from the City watchdog the Financial Conduct Authority (FCA) has found.
In an extensive new piece of consumer research, the FCA surveyed 13,000 UK adults on various aspects of their financial lives.
Overall, 31% of respondents said they have no private pension whatsoever, be that a workplace defined contribution or defined benefit scheme, or a personal, non-workplace pension. Almost a third (32%) said they felt it was too late to start one. A quarter (26%) said they couldn’t afford to pay into one while 12% said they would rely on a partner’s income.
Forgoing a pension, even later in life, is a costly choice given the tax breaks involved and the potential for employers to match contributions.
Remember, the benefits of putting money into a pension essentially amount to free money: if you are a basic-rate taxpayer and you contribute £100, the government would top it up by £25 (effectively paying back the tax you would have paid on that money) and your employer could potentially match the gross amount (£125), bringing the total contribution to £250.
That’s an immediate, zero-risk investment return of 150%.
Get started by reading our guide to putting your retirement savings plan into action.
Rise of pension scams
Now that pension pots are more easily accessible to people aged 55 and over, some worry we could see a spike in scams and fraud trying to get people to crack open their pots.
With regards unsolicited contact – which may or may not be scams – the FCA found almost one in four UK adults have experienced one of the following:
- Calls, emails or texts claiming to be from the government, and offering retirement planning advice or a free pension review;
- A request to access a personal or company pension before the age of 55;
- The chance to unlock a pension early an dget money, or the offer of a ‘loan’, ‘saving advance’ or ‘cashback’ to take advantage of a pension deal; or
- Offered either the chance to make a high-return investment and/or to buy shares in a company.
In the age group of 55- to 64-year olds, 30% have received unsolicited approaches about pensions or investments in the last 12 months alone. Although only one in 20 of those approached actually responded (5%), this suggests 107,000 people in this age group have potentially been the subject of a scam.
- It can be difficult to spot a fake, fraudulent or scam website. Read our guide for some telltale signs.
- If you think you’ve been scammed or approached by scammers, follow these steps to alert the authorities.
- Finally, want to make a difference? Be sure to sign our petition demanding the government does more to help and protect the victims of pension scams.
Consumers struggle to find financial advice
If you aren’t sure about how you’ll fare when you retire, you might want to take some financial advice. But according to the FCA’s research, fewer than half of UK adults (46%) say they know where to look for a financial adviser.
And of those that have taken financial advice in the past year, 13% feel they have been mis-sold a product – hardly a vote of confidence in the advice sector.
Finding an adviser can be really challenging – especially given the problems we’ve uncovered at some of the most-used directories online. But still, if you search broadly and thoroughly enough you should be able to find one that fits your needs and isn’t too far away.
If you feel you’ve been mis-sold a product, take it up with your adviser in the first order. If you’re not satisfied with the result you can go to the Financial Ombudsman Service, which is totally free to use and has the power to award compensation.