Nearly 3 million do not know whether they can retire comfortably

• 10% of employees – which could be around 2.85 million people – have no idea whether they will be able to retire comfortably
• 22% not confident planning for a financially comfortable retirement
• 72% said the cost-of-living crisis has made them more anxious about their finances
• 79% would like more support from their employer about planning for a financially comfortable retirement

Aviva – one of the UK’s largest workplace pension providers – has found more than one in five (22%) employees surveyed are not confident planning for a financially comfortable retirement. This could be around 6.3 million employees in the UK. ^(1/2/3)

Aviva’s Working Lives Report 2023: Fit for Future (June 2023) found those closest to retirement are less confident than younger employees about their post-work finances. More than a quarter (26%) of over 45-year-old employees said they were not confident about retirement planning compared to one in five (20%) 16–44-year-olds.  

Most employees say their pension will only provide enough money to “just get by” in retirement (39%). Only one in five (20%) said their pension would be enough to retire comfortably, and one in ten – which potentially equates to around 2.85 million employees - have no idea (10%). ⁽⁴⁾

This is a particularly financially challenging time which makes it more important than ever that people understand their pension savings and the retirement options available to them.

Emma Douglas, Director of Workplace Savings & Retirement

Again, those employees closest to retirement age are more likely than younger employees to have no idea whether they will have a financially comfortable retirement. With 14% of over 45-year-olds saying they don’t know if they will be able to retire comfortably, compared to 10% of 16–44-year-olds. This could equate to around 1.68 million employees who are over 45-years old and who might feel they are facing an uncertain future. ⁽⁵⁾

Younger employees (aged 16-24) are the most positive of all age groups (29%) about their retirement finances. This steadily decreases the older people get, with just over one in ten (13%) over 55-year-olds saying their pension will be enough to retire comfortably.

Almost three quarters of employees (72%) said the cost-of-living crisis has made them feel more anxious about their finances, with women more likely (78%) to feel this anxiety than men (65%).

Emma Douglas, Director of Workplace Savings & Retirement, said:

“Pension freedom legislation has given people more flexibility and choice when it comes to choosing how to use savings at retirement, but it has also created a wealth of options. It is desperately concerning that many pension savers are overwhelmed by the choices they face and are sleepwalking into retirement.

“This is a particularly financially challenging time which makes it more important than ever that people understand their pension savings and the retirement options available to them.

The pensions industry and government must work together to support today’s retirees.

Emma Douglas

“Whether you want to consolidate your pensions into one pot; work out whether drawdown or an annuity or a blended option is right for you; or how to make sure your pension savings last throughout retirement; getting the right advice, guidance and support is essential.”

Almost 4 in 5 (79%) employees would like more support from their employer about planning for a financially comfortable retirement. Of those, more than two in five (41%) would like more information on how to build up a pension pot, and 45% would like more information on how to make a pension last throughout retirement.

One in five (20%) employers surveyed said they only provide the minimum retirement planning information which is required. ⁽¹⁾

Emma Douglas said:

“The pensions industry and government must work together to support today’s retirees in making the right choices for what we hope are long and financially comfortable retirements.

“We are calling on government to support pension savers by ensuring they get access to some form of financial advice at retirement which may be full or simplified advice depending on their circumstances. We are also asking for the removal of regulatory barriers to allow providers and other regulated entities to deliver more effective support, such as personalised guidance. We also feel more can be done to support employers in promoting pension advice and guidance through workplaces.” ⁽⁶⁾

Aviva’s tips for making sure retirement clicks into place:

1. Time: Start saving for retirement as early as possible, ideally at least 40 years before planning to retire.
2. Amount: If affordable, aim to save at least 12.5% of your salary into your pension savings every month. You do not have to do this on your own if your employer makes contributions on your behalf, and you get tax relief on the money you put in.
3. Final pot size: Aim to build a pension pot of at least 10 times your annual salary by retirement.
4. Tax relief: For every £8 saved towards your pension, the government adds an extra £2 in tax savings.
5. Investing wisely: Understanding investment basics could help you take more control of you later life planning. Your money is invested to help it grow over the long term; however, the value of a pension can go down as well as up and you might get back less than you invested.
6. Keep checking: Annual pension statements can be used to track retirement targets and help you build a clearer picture of your progress.
7. Online tools: Make use of free online retirement calculators which can help you feel more in control of your retirement planning. Aviva Retirement Tools and Calculators.
8. Reframe expectations: Life expectancy in retirement could easily be 20 years or more. The Pension and Lifetime Savings Association’s Retirement Living Standards is a useful guide on how much money is needed for a Minimum, Moderate or Comfortable standard of living in retirement. The Office for National Statistics provides a life expectancy calculator to discover how long you might be retired.
9. Lost pensions: Check with the Pension Tracing Service to find any lost pension savings.

Living Pension

Aviva is one of the first UK employers to be awarded the Living Pension accreditation, which launched earlier this year. Aviva automatically enrols new starters on a pension contribution of 14%, of which 10% is contributed by Aviva and 4% by the employee. Aviva is the first employer to sign up to all three of the Living Wage Foundation's accreditations: Living Wage, Living Hours, and Living Pension.

Authored by Aviva