London - Britain's over-50s are in blissful ignorance of how
little their pension pots will pay out and need an urgent financial health
check if their retirements are to be as comfortable as they expect, an industry
Workers approaching retirement in the next 15 years need to
see their pension pots grow by almost 80% to meet their expectations, the
National Association of Pension Funds (NAPF) said on Friday.
"Millions of people are within a decade of their state
pension but have still not thought about how long their retirement might
last," Joanne Segars, chief executive of the NAPF, said in a statement.
The burden of managing a pension at retirement has
increasingly fallen on employees, as defined contribution (DC) pensions, rather
than final-salary schemes, become the more dominant form of retirement saving.
The introduction of the government-backed auto-enrolment
scheme - where people are required to opt out rather than opt into retirement
saving - could lead up to 8 million additional workers being signed up for
pensions, which will likely be DC pension memberships.
Yet a third of workers aged 52 to 64 remain ignorant about
what their private pension income may provide in retirement, while 59% of
workers have never thought about how many years of retirement they need to
finance, a report by the Institute for Fiscal Studies and supported by the NAPF
Women in their 50s are living to an average of 88 - four
years longer than expected - while men are living to 85, overshooting life
expectancy by around two years, when compared with national projections of life
expectancy, the report said.
Annuities, which many British retirees buy to ensure a
steady income, are meanwhile becoming more expensive, meaning people will
expect their savings pots to generate a higher annuity income than it actually
Private pension firms have also been accused of failing to
disclose some of the costs they levy on customers' investment funds, leaving
people unaware that their pension savings were being eroded by the charges.
The NAPF represents 1 300 pension schemes in the UK with 16
million members and assets of around £900bn.