Datamonitors Financial Services Consumer Insights (FSCI) Survey reveals the truly global nature of the pension crisis. As countries around the world suffer from the economic downturn, Datamonitors FSCI survey reveals that global industry attempts to promote pension savings have been a failure with around 69% of individuals globally still not having any pension policy in place.
The confirmed trend of people not saving enough, if anything, for their retirement is alarming, says Annabel Gorringe, life and pensions lead analyst with Datamonitor. It is as high as 83% in Spain and the UK following shamefully close with 72% of individuals not holding any pension savings. As a consequence, the warning is that those who are not putting adequate money aside for their retirement pension will be facing pensioner poverty and are unlikely to maintain the lifestyle that they are used to.
Annabel Gorringe says: The UK in particular faces a lost generation of pension savers. Datamonitors results show that 89% of 18-24 year olds do not currently hold a pension policy. The stark figure suggests that young people are discounting the value of importance in building up retirement savings. She adds: While many individuals who lack reasonable savings will find some hardship during retirement, a good point that should be adopted by people, especially young people, that saving from an early stage in life makes retirement much easier.
When it comes to those approaching retirement, the story is still alarming with 68% of 50-64 years old in the UK not holding a pension at all. This group is on the home straight, recognizing, particularly given the current volatility, the risk associated with most asset classes, and therefore should have a strong inclination to ensure a retirement income. They do not have the working life left to gamble their retirement savings. However, the vital results prove otherwise and suggest that factors such trust and affordability may play key parts for people when starting and maintaining their pension savings behavior.
Gorringe explains: Consumers also, have historically relied on their property as their pension. Millions of homeowners have and intended to release equity from their homes to supplement their retirement income with their house being the largest asset they own. The Office of National Statistics (ONS) shows that there are 9.5 million people in the UK over-65 years old and that housing equity comprises 75% of their wealth. However, these individuals are now re-thinking their strategy as the housing bubble has burst and are regretfully realizing that they cannot pin their standard of living in retirement on the performance of a sole asset.
With some people in retirement feeling that they are dealing with consequences of earlier decisions and working consumers still not grappling the importance of the need to start saving for a pension, the crisis looks set to continue. Consumers are also slowly realizing that they cannot rely on their buckling state systems as the recession takes its toll on governments finances.
Gorringe concludes: The difficulties of saving for retirement seem to have been woefully underestimated by both policymakers and individuals themselves. Datamonitors survey results are a confirmation of how consumers have not fully realized the extent of how much they would have to shoulder responsibility for providing for their retirement income than previous generations. Gorringe says: If consumers cannot rely on the state and their employers to provide much pension income, consumers face huge challenges. Simply for this, the need to engage consumers with private pension provision is more necessary than ever before.
L.D.