Pensions encourage people to think about their finances ahead of retirement, however the current pension system may actually discourage saving.
A survey conducted by PwC has found that a variety of factors are deterring workers from saving for their pensions. One of the reasons cited is the complexity of the rules and restrictions set out. Younger and female workers in particular are not saving as much on average with warnings that contributors may not be able to provide the expected retirement income. One pension company has estimated that those retiring in 2050 will need approximately £660,000 in their pension pot to match living standards of current retirees. However, the average 35 year old only has £14,000 in their pension fund.
Raj Mody, the head of pensions consulting at PwC said:
"Any system that is asking people to lock up their money for many years needs to be simple to understand, trusted and sustainable to encourage greater savings levels. It also needs to include a strong up-front incentive."
The good news is that it's never too young to start thinking about retirement (or too late). If you are looking for help and advice on setting up a pension, don’t hesitate to get in touch.