See the findings here.
Tom Selby, senior analyst at AJ Bell, comments:
“While progress has been made in boosting pension participation in the UK, there remains a huge amount of work to do if we are to prevent under-saving for retirement becoming a crisis further down the line.
“While policymakers might be keen to push minimum automatic enrolment contributions beyond 8%, there is a danger that going too far too fast will cause mass opt-outs – particularly if average earnings continue to lag inflation.
“It is therefore critical that all parts of the industry work to boost understanding of the benefits of retirement saving and the potential consequences of not saving enough.”
ONS Wealth and Assets Survey – key retirement findings
1. Most non-retired people believe property will deliver the strongest retirement returns
“The old refrain that ‘my property is my pension’ continues to be the mantra for many savers, particularly those who have benefited from rapidly rising house prices over recent decades. Indeed, the ONS survey reveals almost half (49%) think property will make them the most money versus 20% workplace pensions and 7% personal pensions.
“However, a pension invested in the FTSE All-Share would have achieved better returns than a single buy-to-let investment over the past 10 years – and that’s just based on basic rate tax relief and doesn’t take into account any employer contributions.
“That is not to say property investing is bad, and indeed many have done very well from the property market in recent decades. But the industry must do better at communicating the vast benefits of pensions, particularly in the wake of the extra flexibility created by the pension freedoms.”
2. Workplace pensions regarded as the safest way to save for retirement; personal pensions third safest
“While it’s positive pensions are seen as the safest retirement saving vehicle by most people (38%), it’s slightly worrying that property comes such a close second (29%). Investing in a single property leaves you totally exposed to that market which, as the financial crisis proved, can go down as well as up. And while the same is true of investments held within pensions, investors are able to invest in a wide range of regions, assets and bonds to reduce volatility.”
3. Income squeeze is a key barrier to retirement saving
“Given the ramifications of the Financial Crisis and subsequent fiscal austerity are still being felt in the real economy through suppressed wages, it is no surprise a large chunk (55%) cited low income, still being in education or not working as the primary reason they are not saving for retirement. A further 29% said they simply couldn’t afford to save into a pension.
“While for those on low incomes or with significant debts, saving for a pension might not be a priority, for the vast majority putting something away early can make a big difference later in life. And for Middle Britain, the message is clear – if you want to enjoy a comfortable retirement, you’ll need to save above the auto-enrolment minimum.
“Thankfully there is a huge amount of choice, with SIPPs offering a wider choice of investments and lower charges; ISAs benefiting from flexible, tax-free access; and Lifetime ISAs enjoying a 25% Government bonus (although accessing your money before age 60 can result in you being hit with a Government withdrawal charge).
“For many, a combination of savings vehicles alongside their workplace pot will suit their retirement needs.”
4. State pension remains a significant source of retirement income
“Over 80% of people expect to get some of their retirement income from the state, compared to 68% from workplace or personal pensions.