15 million risk pension poverty

Around 15 million adults have no pension provision. They're taking a big risk.

Too many Brits aren’t saving for their retirement. According to F&C Investments, 41% of UK adults have no pension provision - that works out at around 15 million adults with no pension.

Sadly, the situation is just as bad when you look at lovemoney.com readers. Earlier this month we conducted a survey of our users and found that 43% of adults under the age of 65 aren’t saving for their old age.

Here’s a table of the results broken down by age:

Are you saving for retirement?

Age	18-29	30-39	40-49	50-59	60-64	Total
Yes	38.1%	49%	64.9%	63.6%	55.6%	56.8%
No	61.9%	51%	35.1%	36.4%.	44.4%	43.2%

The answer that worries me the most is the fifty-something segment - 36% aren’t saving at all for their retirement. If you’re one of those non-savers, I’d urge you to think again.

Yes, as things stand, the state pension and some means-tested benefits give pensioners just about enough to live on. But there are no guarantees that government pay-outs will continue at that level. Especially when you remember that the number of pensioners is set to rise.

I realise that many non-savers in their 50s will think that it’s too late to start now. But actually you can still make a difference. If you were able to save £400 a month for the next ten years, you might then have an £80,000 pension pot when you retired at 65.* That could give you an annual income of around £4,800 a year on top of your State Pension. Read Five top tips for pension late starters for advice on what to do next.

If you've left your pension planning to the eleventh hour, find out how to catch up quick.

Younger folk

The results for the under-30s make for slightly happier reading. I know that many twenty-somethings are understandably focused on paying off their student debt and saving up for a deposit on a home. So I’m pleased that 38% are also finding some cash to save for their retirement. Still, it would be great if more youngsters were saving.

When it comes to saving for pensions, starting young can make such a difference. That’s because you’ll have more time to benefit from The miracle of compounding.

How are you saving?

We then asked the readers who are saving:

How are you saving for your retirement? (more than one answer is permitted)

	18-29	30-39	40-49	50-59	60-64	Total
I save into a pension	75.6%	84.4%	81.9%	74%	67.1%	77.5%
I save into ISAs	42.2%	41.8%	52.5%	64.6%	76.8%	56.6%
I’m investing in property	13.3%	24.6%	28.8%	23.4%	24.4%	24.6%
I’m investing in shares outside an ISA	22.2%	24.6%	28.8%	23.4%	24.4%	24.6%
I’m putting money in a savings account outside an ISA	28.9%	27%	29.9%	40.1%	47.6%	34.8%
Other	2.2%	3.3%	8.5%	9.4%	12.2%	7.8%

I was interested to see that so many people are saving into ISAs. That makes a lot of sense. ISAs offer a great combination of tax breaks and flexibility – you can withdraw money from an ISA whenever you like. In fact, some people like ISAs’ flexibility so much, they prefer them to pensions where you can’t access your money until you’re 55 at the earliest.

However, I wouldn’t dismiss pensions completely. In some ways, I like the fact that your money is locked away until you’re 55. That way, you can’t be tempted to raid your savings to pay for a fancy holiday that you can’t really afford.

Related how-to guide

Get ready to retire

There are a lot of things to think about as you get closer to your retirement. But the early you start to prepare, the better.

See the guide

The argument for saving in a pension becomes compelling if your employer offers a pension scheme where it will match your contributions into your pension fund. So if, say, your employer will pay in 5% of your salary as long as you do, you’d be mad to turn down that opportunity to build a sizeable pension pot.

Using property as your pension worries me a bit. I accept that some people have made big profits from property over the last 20 years – I’m just concerned that if your pension is tied up in one or two properties, you’re increasing your risk somewhat. Being a landlord also involves a fair amount of hassle.

Save! Save! Save!

When all is said and done, I’m not too bothered about what savings vehicle you use. As long as you’re saving for your old age, I’m happy. Then you won’t have to fret about whether future governments will cut back state provision for pensioners....

*The £400 a month figure is boosted by 20% tax relief. I then assumed that the savings grew by 5% a year above inflation.

More: Find a super savings account | Be a pension millionaire! | You are turning down free money!