Many employees still feel confused about pensions and only just over half think their workplace pension will provide an adequate standard of living in retirement, according to new research.
However the Institute of Fiscal Studies (IFS) report on retirement expectations shows that many workers are more realistic about their retirement. The report found men aged 40 to 54 are expecting to retire 2.1 years later than they were 10 years ago, and women 2.4 years later.
They are also less likely to give a retirement age that is a multiple of five, suggesting some more considered long term planning, that takes into account individual circumstances.
However the report found only 53 per cent of people are confident that their pension will give them the standard of living they hope for, although this has increased by 11 per cent, since 2008.
It also found only half of people think they understand enough about pensions to make decisions about saving for retirement.
A parallel report also looked in more detail at AE, and why so people chose to opt out. Figures from the Office of National Statistics have shown AE has led to numbers savings into workplace pensions reaching an all-time high.
The IFS points out that participation among eligible 22- to 25-year-olds has leapt from 20 per cent to 88 per cent over the past 10 years, and among older workers (aged between 51 and 55) participation rates have jumped from 55 per cent to 93 per cent.
However, around 10 per cent of eligible workers chose not to participate. The IFS study though says it remains unclear why these decisions were made.
It points out though there is no significant difference between participation rates from those who were behind on bills or had higher levels of debt. Prior to AE pension savings was particularly low among these groups.
The report did find an increased likelihood of turning your back on pensions if your partner has also opted out, with participation rates for automatically enrolled employees who have partners who were automatically enrolled but left their pension scheme being only 64 per cent.
Hargreaves Lansdown senior analyst Nathan Long says: “Understanding remains low, but evidence shows people in their 40s and 50s taking more precise predictions of when they’ll retire, suggesting a greater awareness than in the past.
“Boosting understanding needs to be the next step on the country’s retirement revolution, making access to helpful information and guidance more readily available. Building effective member engagement is the critical next phase in pensions policy development.”
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