Does the UK know how much to save up for retirement?
Have you ever thought about what you’ll do with your life when you’re done working? Do you see yourself spending your days in a big house in the English countryside, sipping cold drinks on a Spanish beach or running off somewhere more exotic? It’s never too early to start thinking about how to save for your retirement and to compare pension options. Depending on whether you also need to pay the rent and what you want your final years to look like, it may take more money than you think to live them comfortably. We commissioned some research to see how much Brits have saved in their pensions.
We commissioned research to find out just how prepared Brits are for retirement.
- The UK’s average pension pot stands at just £42,651
- This figure makes up just 18% of the recommended total of £237,000 for those retiring at age 67
- 19% of the population (a fifth of all Brits) say they have no form of private or workplace pension
- A further 18% of the population have a workplace pension but no private pension
Pension withdrawals in the UK
We conducted a survey across the UK to find out how much Brits currently have saved in their pension pots. Our findings revealed that the average pension pot in the UK for all Brits (both retired and non-retired) stands at just £42,651.
With pension specialists recommending that someone retiring at 67 should have at least £237,000 saved for a “comfortable” retirement, this means that the average Brit’s pension stands at just 18% of this figure. The more worrying findings from our survey revealed that 19% of the population say they have no form of private or workplace pension. This equates to about a fifth of the nation having no pension at all. A further 18% have a workplace pension but no private pension.
Meanwhile, non-retired Brits have just £33,809 saved in their pension pot – £203,191 less than the recommended amount for a comfortable retirement according to Profile Pension’s pension calculator.
The amount in your pension pot is currently the national average in 2021.
|Percentage of population||Number of Brits|
|Have a pension||81%||42,446,709|
|Have no pension||19%||9,956,635|
Effects of pension withdrawals
A fifth of the population currently have no form of private or workplace pension, and this could be for varying reasons. Some may have chosen to opt out from their workplace pension if they were in a situation where their finances would immediately benefit from the extra money. Alternatively, a loss of employment may have affected their access to it. Many Brits may have also taken similar steps with their private pension to stay afloat during the pandemic – this includes reducing, pausing or stopping payments altogether.
However, it should be noted that the long-term effects of taking such action can be grave if that money isn’t replaced. Considering the effects of compound interest, any amount paid into a pension pot today could be worth thousands more in just a few decades. As an example, £10,000 paid into a pension pot now, earning an interest rate of 5% per year, would be worth £25,330 in 20 years, £41,259 in 30 years and £67,207 in 40 years. The graph below demonstrates this increase over a period of 70 years.
Pensions by gender
The most surprising statistics are seen in comparisons by gender, where the survey also revealed a discrepancy in pension amounts for men and women. On average, men who have not yet retired have £62,336 saved in their pension pot, while women have just £22,735 saved – 64% less.
Some reasoning behind this disparity can be attributed to the differences in salary between men and women. Despite the gender pay gap among all employees reducing from 17.4% in 2019 to 15.5% in 2020, this still means that when even the minimum pension contribution of 8% is applied to earnings by gender, women accumulate less in their pension pot. Women also make up the majority of part-time employment in the UK. In December 2020, 38% of women were working in part-time employment, compared to just 13% of men.
|Average amount in pension||£62,336||£22,735|
Pensions by generation
In terms of age breakdowns, millennials have £17,175 saved on average. As you would expect, these totals rise along with the generations. Gen X have £35,175 saved, while baby boomers have £61,546 in their pension pot. Despite many of them being retired, the average amount saved by the silent generation is only £111,855.
Millennials understandably lead the way with 21% and 15% not having a pension. However, the figure remains high for gen X (19%) as well. Despite many people within these demographics being retired, a staggering 22% of baby boomers and 30% of the silent generation said they did not have a workplace or private pension. This would leave them with just a state pension to live off.
Finder commissioned Censuswide to carry out a nationally representative sample of 2,000 people throughout Great Britain at the end of April 2021, with representative quotas for gender, age and region.
The future projections were calculated by taking the amount of £10,000 and applying 5% interest each year, and the comfortable retirement amount of £237,000 at the beginning of retirement (aged 67) was taken from the Profile Pensions pension calculator.
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The UK’s average pension pot stands at just £42.7k – 18% of the recommended total
A survey conducted by the personal finance comparison site, finder.com, has found that the average pension pot in the UK stands at just £42,651.This figure drops even further for non-retirees, who only have £33,809 saved on average.
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