http://visual.ons.gov.uk/private-pensions-and-retired-households/
The headline findings are:
Income of retired households with private pensions 60% higher than those without
Income inequality in retirement rising as austerity reduces role of the state
Rising number of retired households have private pensions (see figure 1 below)
This is likely to be further boosted by automatic enrolment
Savers must take responsibility to build a decent, sustainable retirement pot
Tom Selby, senior analyst at AJ Bell, comments:
“These latest official statistics are a stark reminder of the impact failing to save for retirement can have. In 2015/16, average disposable weekly income in retirement for someone with a private pension was £534.75 versus just £331.33 for someone who hadn’t built up their own pot.
“Previously the state might have filled at least some of this retirement income void but in a world of austerity cuts this is increasingly not the case. The net result is the gap between the pension ‘haves’ and ‘have nots’ is on the rise (see Figure 2 below).
“Government reforms, primarily automatic enrolment, should go some way to improving retirement outcomes in the UK but savers need to realise that the responsibility is firmly on their shoulders. For the majority the auto-enrolment minimum total contribution of 8% won’t be enough and the state pension, while providing a useful base income, is not sufficient to cover most people’s costs. This will particularly be the case for those who still have a mortgage to pay off in retirement or need to pay for long-term care.
“This is not to say it is all doom and gloom, and the fact 79% of retired households now have at least some private pension compared to only 45% in 1977 is evidence of the strides that have already been made.
“But coverage is only part of the story and it is now incumbent on Government, regulators and the wider industry to ensure people feel confident enough in the pension system to save enough to fund a decent retirement.”
Figure 1. Private pension coverage among retired households has increased steadily since 1977
Source: ONS
Figure 2. The decline of the state is beginning to have an impact as benefits are reduced
Average disposable household income in retirement, £ per week
Source: ONS