Attitudes Towards Income in Retirement

Key findings

• People in Britain are critical of this Government's record on tackling pensioner poverty, with the majority saying that the Government has not tackled pensioner poverty well. Six in ten express this view, while one in five is positive about the Government's handling of it, and one in five is undecided.
• More than half the GB general public believe the State retirement pension should be enough for a pensioner to have a disposable income, and older people are particularly likely to hold this view. Three in ten say it should provide enough to cover basic living expenses only, and just 6% say it should only provide a contribution towards living expenses.
• Only around half of people below the State retirement age are currently saving for retirement or paying into a pension, and only one in five feels confident that they will have sufficient income in retirement. More than one quarter of people aged 16 to 64 say they have not really thought about saving for retirement or paying into a pension.
• Most people do not know how many years' National Insurance contributions they need to have made in order to receive a full State retirement pension, and people tend to under-estimate. The mean figure given by male respondents is 36 years (against an actual figure of 44 years), while women's average estimate is 34 years (against a current actual figure of 39 years, which will gradually rise to 44 years between 2010 and 2020).
• The vast majority have no idea how much money they would need to have saved in a private pension fund in order to get 163100 per week, on top of the State retirement pension, if they retire at the age of 60. Around three-quarters say that they do not know, and just 1% give an answer in the correct range of 16380,000 -- 16390,000.
• The focus groups among people in their 30s on moderate to low incomes clearly highlight much confusion over pension options, plus a certain degree of fear about the future.
• There is a great deal of diversity in experience, with a minority having made considerable provision, while many others have not given the matter any thought. However, even those who have made provision are generally not sure whether it is sufficient for them to live comfortably in retirement. Estimates of the amount of money needed in a pension fund (or savings) on retirement varied widely, from 16330,000 to 163300,000. Most people struggled to give a figure at all.
• Some people -- particularly in London where the cost of living is high -- do not feel that they are able to make any provision for their retirement, as day-to-day life is 'a struggle'. For example, one man has two jobs in order to afford a 'comfortable' life.
• Of those who are saving, many people simply pay into their company pension, which is generally regarded as a 'good thing', but they do not know what to expect as a return, and say they simply pay in as much as they feel they can spare.
• People generally feel that both the Government and the individual are responsible for providing for their retirement. The Government is seen as an important safety net for those who are struggling and really need help, while private pensions are an added bonus, for providing luxuries.
• Some people feel the current Government is encouraging individuals to save as much as possible (for example, through the introduction of stakeholder pensions), so that it can absolve itself of some responsibility for their future. They say it is a Government plot to get rid of the State pension.
• People in the focus groups said they would like straightforward information about exactly how much they should be saving now, if they were to be able to have a decent, liveable income in retirement. They think it is the responsibility of the Government to provide this information, and do not trust banks nor private pension companies. Many people feel they are not putting away enough money for retirement, but do not know where to go for advice. By the same token, many may not have the means to make adequate provision.

Conclusions

• There is clearly much confusion about what sort of provision people should be making for their retirement, and exactly how much they should be putting aside each month. This is also confirmed by the quantitative results showing that only one in five of the GB public (aged 16-64) is confident that they will have sufficient income in retirement, and only half are making any provision. It points to a need for further information and education on the subject of pensions. Focus group members clearly state that they would like straight-forward advice from the government on how much money to save, and where to save it. At the same time, however, there is a clear feeling among the public that the government must still fulfil its responsibility to provide for those who simply do not have the resources to save themselves, and that the state retirement pension must provide enough to have a disposable income.

Technical details

Quantitative Research

Questions were placed on a general public Omnibus survey. A nationally representative quota sample of 2,100 adults (aged 16 and over) was interviewed throughout Great Britain in approximately 150 different sampling points.

Interviews were conducted face-to-face, in respondents' homes, using CAPI (Computer Assisted Personal Interviewing) between 8-11 February 2002.

Focus groups

In addition to the quantitative research, MORI conducted two focus groups among people with moderate to low incomes (16310,500 -- 16320,000) aged between 30 -- 40 (the target group for the Government's stakeholder pensions).

One group was held on 12 February 2002, in a central London location, and a second group was held in Leeds on 13 February 2002.

Toplines results

• 2,100 interviews conducted face-to-face and in-home between 8 -- 12 February 2002, among adults aged 16+ throughout Great Britain
• All data are weighted to the known national population profile
• An asterisk (*) denotes a figure of less than 0.5% but greater than zero
• Where percentages do not sum to 100%, this is because of computer rounding or multiple responses
• The base for each question is all respondents interviewed (2,100) unless otherwise stated

Q1 Since it was first elected in May 1997, do you think the government has or has not tackled pensioner poverty well?

Q2 In your view, should the state pension be enough to ... ?

Q3 Which, if any, of these statements best describes your current position in terms of planning for your income in retirement? Please include only your own personal provision or any joint provision with your partner or spouse, but not any savings solely in the name of your partner or spouse.

Base: All aged 16-64 (1,599)

Q4 How many years of national insurance contributions do you think you personally would need to have made in order to receive a full state retirement pension when you retire?

Q5 In your estimate, how much money in total would you need to have saved in a private pension fund in order to get 163100 per week, on top of your state retirement pension, if you retire at the age of 60?