Nearly half of all U.K. adults don’t have a retirement plan, despite a government push for broader employer plan enrollment.
In a survey of nearly 13,000 adults, the U.K.’s Financial Conduct Authority found that 49 percent still do not have a private pension. Of those who do currently have a retirement plan, 34 percent have only a defined contribution plan, while 13 percent are only members of defined benefit plans. One in twenty-five had both a defined contribution plan and a defined benefit pension.
These figures are in spite of U.K. regulations which since 2012 have required employers to enroll staff in retirement plans. Over the past five years, U.K. companies have been automatically putting all employees earning £10,000 ($13,000) a year or more into savings plans, although staff can opt out.
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In the FCA survey, the watchdog acknowledged that the number of Britons with private pensions was now “lower than we might expect” but said the numbers were skewed by the inclusion of retirees. When the FCA excluded retirees, it found that 38 percent of U.K. adults had no private pension, 41 percent had a defined contribution plan only, and 16 percent had a defined benefit pension only.
The report’s release coincided with the first day of the annual conference for pensions trustees, held by the Pensions and Lifetime Savings Association in Manchester, U.K.
Speaking in a plenary session on the first day at the event, Troy Clutterbuck, interim chief executive of Now: Pensions, said the U.K.’s auto-enrollment program has been “a bigger success than anyone dared hope,” adding that opt-out rates were much lower than had been anticipated. However, he said that there are still too many individuals without adequate pension provision.
“Although we have been so successful in terms of policy and implementation in the first number of years, there are no laurels to be rested upon,” Clutterbuck said. “We are still so far advanced than where we were in 2012.”
The FCA report also considered how much money those actively contributing to a retirement plan are saving. Of surveyed adults in a defined contribution retirement plan, 12 percent had more than £100,000 in their pension pot, while 22 percent had less than £5,000 and 14 percent had between £5,000 and £20,000.
Last week, the PLSA launched an initial consultation paper entitled Hitting the Target to encourage members to examine the current levels of retirement incomes within the U.K. and make recommendations about how pension provisions can be increased.
In a statement accompanying the FCA report, chief executive Andrew Bailey said the new data would help the watchdog prioritze its work going forward. “We also hope that the research will provide valuable insight for other organizations focusing on consumers and finance,” he said.