Admins reveal collapse in retiree savings levels
On the go: UK retirees are leaving the workforce with lower levels of savings than previous generations, as the decline of defined benefit opens a gap in the nation’s retirement preparations.
The median saver between ages 55 and 64 now has £71,000 in their pension pot, a collapse from £106,100 just two years earlier, according to administrator Equiniti.
Among the least wealthy segments of the surveyed savers, many have next to no savings, suggesting they could be reliant on state pension and benefits in later life. The 25th percentile pot size was £8,500, down from £20,700 in 2014-16.
The collapse comes after a period of gradual increases in pension wealth, peaking at a median total of £114,700 in 2012-14.
The results appear to be linked to the level of DB provision, which remains in steady decline in response to increased funding costs for employers. Workers in the public sector, where DB is more widely available, had significantly higher average pot sizes.
While median savings have also dropped for younger cohorts, the introduction of auto-enrolment means results are not as pronounced.
Duncan Watson, chief executive of Equiniti’s pensions business, commented: “It is alarming to see that so many people within 10 years of reaching the state pension age are looking likely to enter retirement with so little reserved in their occupational pension savings.
“Innovation through auto-enrolment and pensions dashboards will transform the pensions industry in this country, but this will be of little comfort for those who will largely be unable to benefit from the reforms.”