Britain’s ‘Ostrich Generation’ ignores or refuses to respond to the changing nature of pension provision, according to research by HSBC.
The Future of Retirement: The power of planning report found that although British workers fear they are under-prepared, the majority are burying their heads in the sand and not making any plans as to how to fund their retirement.
The report found that almost half (49%) of working age Britons expect to be worse off in retirement than their parents; just 27% expect to be better off.
Nearly one in five (17%) do not know what their main source of retirement income will be, and a further 21% stated that they will rely on the state pension.
Of those expecting to be worse off than their parents in retirement, three in five said that the major reasons are that state and employer pensions are not as generous as for previous generations.
As a whole, 68% of respondents are worried about coping financially and 48% fear they are not saving enough for their retirement, rising to 57% among women in their 30s and 40s.
However, 39% of respondents have put a financial plan in place to provide for their futures and 68% are worried they are not financially prepared.
HSBC has identified four categories of financial preparedness;
•Disengaged non-planners (35% of the population) who are doing nothing, with the primary reason being a belief that they lack the necessary income.
•Advice-seeking non-planners (25%) do not have a plan but do take occasional financial advice.
• Self-guided planners (13%) have a plan in place but do not seek professional advice. Tend to be younger, on mid to high income and internet savvy.
• Advice-seeking planners (26%) have a plan and take professional advice to help manage their finances.
HSBC found evidence in the survey of a ‘planning premium’ among respondents; Britons who have a financial plan have 2.3 times more than the UK average in their pension pot while non-planners have saved 47% less.
Those Britons with plans have accumulated on average £123,000 in their savings and investments for retirement, compared to the average UK household of £53,000. Non-planners will have around £28,000.
David Wells, head of investments, pensions and savings at HSBC Bank, said: “The emergence of this Ostrich Generation is a real concern. Britons know that they need to plan and save more for their retirement, yet are not turning this knowledge into action.
“People need to look around and take proper stock of what they need to do – they can no longer totally rely on the state or their employer to provide for them. In the 21st century it is all about taking individual responsibility.
“There is very good news for those who do plan – regardless of what they earn or how much or little they can afford.
“The very act of starting a plan and putting it into action today will reap significant financial and emotional rewards, a good plan now is far better than a perfect plan tomorrow.”
Joanne Segars, chief executive of the National Association of Pension Funds, said: “Far too many people are trapped in the headlights when it comes to their own retirement.
“They know they will need money in their older age, but they are doing nothing to prepare for it.
“It is worrying that such a high proportion are not building up their own pension. They could face a big shock when they end up scraping by on one of the worst state pensions in Europe.
“As the report shows, those who do take steps to save for their retirement end up in a much stronger position. And the earlier people start, the better.
“Even a small amount put into a workplace pension, helped by tax breaks and employer contributions, can make a huge difference decades down the line.”
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