Five great reasons NOT to buy a pension

Nearly 14 million people have turned their backs on pensions. They can't all be wrong, can they?

You might think 13.6 million people can’t be wrong, but actually, they can. That’s the number of UK adults who don’t have a pension. It works out as nearly four out of 10 adults, according to research from Baring Asset Management.

And it’s not just young people, who may have more pressing financial priorities, such as how to clear their student debt or save for their first home. Some 1.4 million over-55s don’t have any pension either, even though they could retire within a decade.

Pension? Moi?

You don’t need me to tell you that this is a bad thing. In fact, you’re probably bored of people like me hectoring you into buying a pension. You know you should have one, but either can’t afford it, or can’t be bothered. So I’ll make things easy for you. I’ll give you an excuse to do absolutely nothing about it. Here are five reasons why you DON’T need a pension.

1. Your needs are few

Maybe you belong to a religious sect that has renounced all worldly possessions. Or are making a stand against modern consumerism. Or you are an extreme vegan, and live happily on a diet of brown rice and dried peas.

If so, you can live the frugal life on the single person’s basic state pension of £102.15 a week, and don’t need savings of your own.

2. You earn too much

The average full-time salary for a UK adult is £26,000. The single person state pension works out at around £5,300 a year. If you don’t have a pension, your income could drop by 80% when you retire.

If you feel you have too much money now, and will be happier on a lot less, again, you don’t need a pension.

3. You have a cunning plan

You don’t need a dreary old pension in your own name, somebody else will provide. For many women, it will be their husband (they’re sooo reliable). For a few, it will be their property. Or maybe an inheritance (providing their parents don’t blow it all first). If you’ve still got your looks, you might find a sugar daddy.

What can possibly go wrong?

4. You plan to live fast, die young

You’re a rock star living a drug-fuelled hedonistic lifestyle, with big plans to die before you get old.

If you succeed, you certainly won’t need a pension. Just don’t fluff it, because failure won’t just be embarrassing, it will be expensive.

5. You trust politicians

You have absolute, unshakeable faith that our elected leaders will guarantee everybody a generous state pension that will keep pace with living costs forever.

In that case, you don’t need a pension of your own.

No pension, no fun

So there you go. If you fit into any of these categories, you don’t need to save for a pension.

But if for any reason you don’t, then you really do need to think about taking out a pension or other long-term investments, such as ISAs.

Without a pension of your own, four things may happen to you. They are already happening to six out of 10 retired people, according to new research from MGM Advantage, which found that:

• Almost 4 million pensioners have scaled back on their daily expenditure.
• Around 500,000 have returned to work.
• Another 250,000 have sought financial assistance.
• And 725,000 regularly rely on credit.

If you don't know where to start with pension planning, have a read of our how to start a pension guide.

I say, I say, ISA

If you have lost faith in pensions, put your money into a stocks and shares ISA instead. Yes, I know stock markets look pretty woeful right now, but this could be a good time to set up a regular monthly savings plan, as you should pick up plenty of stocks while prices are depressed, and benefit when the global economy finally recovers. Check out Savers turn to stocks and shares ISAs.

Small can still be beautiful

Which leaves one difficult question. What if you can’t afford pension contributions? It certainly isn’t easy, especially if you are on a low income, or have expensive family commitments. But saving a little is better than nothing.

With any luck, the coalition will decide it can afford its proposed £140 a week single tier state pension, which should give every pensioner a halfway decent basic income. Any nest egg you can scrape together will come on top of that, without being eroded by means testing, which should give you a clear incentive to save even a small amount.

If you can afford pension contributions, but simply haven’t got round to it, now is a good time to get started. They say there is wisdom in crowds, but 13.6 million people really can be wrong. Make sure you’re not one of them.

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