Workers approaching retirement have only a limited knowledge of pensions, a study suggested
Workers approaching retirement have only a limited knowledge of pensions, with nearly half not knowing how much they would need to save to enjoy the lifestyle they want, a study has suggested.
The typical person aged between 55 and 65 would like to retire at 63, although the majority accept that they will probably have to continue working until they are 65, according to the Oddfellows Friendly Society.
Workers also think they will need an income of around £25,000 a year before tax to enjoy a reasonable standard of living when they retire.
But nearly half of people either did not know how much they would have to save to achieve this income or declined to answer the question, and those who thought they knew said they would need to accumulate a pension pot worth an average of £380,000.
But the group warned that based on an annuity rate of 5%, people would actually have to save nearly £500,000.
Three-quarters of people said the state pension and state benefits would form a significant part of their retirement income, but a fifth of people admitted they had no idea what they were entitled to.
One in three people approaching retirement also said they did not know if their savings would affect their entitlement to benefits. But despite their lack of knowledge, only a third of people had taken professional advice, with many instead relying on newspapers, magazines and the internet to inform them.
Philip Howcroft, chief executive of Oddfellows, said: "The findings of this research should be of concern to the whole country.
"It's clear there's a huge gap in the knowledge that people should have if they are to save effectively for retirement. There's an urgent need for better education and training around retirement saving and an urgent need for greater simplicity and clarity around pensions and savings products."
The research, which was carried out by think-tank the Centre for Retirement Reform, also found that people were open to a higher state pension age, with half of people saying they would support delaying the age at which people could claim their state pension to 70 as long as they were given adequate time to prepare for the change.
