Friends Provident says one fifth of Britons believe they could live on less than GBP50,000 in retirement, the equivalent of just GBP44.24 a week.
One fifth (20%) of the UK’s population believe they will need less than GBP50,000 set aside in order to enjoy a comfortable retirement, according to the Friends Provident report.
Friends Provident, however, claims the findings reveal a lack of consumer understanding about pensions and saving for retirement. A lump sum of GBP50,000 would equate to GBP44.24 per week after tax – just over a quarter of the UK’s minimum wage.
Currently people can rely on the state pension to top up the amount they have to live on each week. The basic state pension as of April 2006 is GBP84.25 per week, which would give somebody with a GBP50,000 pension pot GBP128.49 to live on each week. This is still less than the minimum wage of GBP162.80 each week.
Friends Provident also claim that 33% of people in the UK have no idea how much of their monthly income they should invest to create a pension that will accommodate their retirement, while 35% have no idea how much they can afford to invest in their pension on a monthly basis.
The continued lack of understanding of pensions is a serious issue and by ignoring this, the British people are facing a pension time bomb. Despite the importance of saving for retirement having a high media profile in recent months, the message still isn’t getting through and consumers are still confused about when they should start saving and how much they should put away each month. This is a wake up call for consumers to start saving sooner rather than regretting it later, said Jeremy Ward, head of pensions marketing at Friends Provident.