Workers shun pensions for retirement saving

Nov 09 2006 by Nic Paton Print This Article

Workers are increasingly putting their retirement savings into a much broader range of financial products and second homes, rather than relying on a pension to fund their twilight years, a British survey has suggested.

The Towers Perrin poll found half of employees polled had ISAs or PEPs, 60 per cent of those over 35 had shares or share-based investments and 10 per cent had a second property. Almost 90% have some form of savings.

When asked what they would do with a 10 per cent increase in salary, just 13 per cent said they would spend it on a pension.

However, "long-term saving" was the most popular option with nearly four out of 10, followed by paying off debts, with nearly a third admitting to non-mortgage debts of more than £3,000.

"The survey results are encouraging. Individuals seem to be making the financial savings journey," says Mark Duke, principal at Towers Perrin.

"The financial education message is finally getting through and those surveyed are acting responsibly and rationally by developing individual savings portfolios that suit their specific means and aims. However, it still remains to be seen whether employees are saving enough," he added.

When company pension plan members were asked what they would do if they were given cash instead of their pension, 43 per cent said they would invest in long-term savings (other then pensions), under a third would convert it back into a pension and only 19 per cent said they would treat the money as extra disposable income.

What the survey showed, said Duke, was that companies should not concentrate on a one-size-fits-all pension plan.

"Attitudes towards corporate pensions are evolving and this survey gives us an even greater understanding of employees' financial objectives," he said.