British savers expect to spend 37 years contributing to a pension scheme before they can retire, putting the UK on a par with Australia as the country with the longest-projected working life out of a group of 17, according to a survey by HSBC.
Over the 17 countries in the study, including France, Mexico, China, Egypt and the US, people on average expected to save for 30 years.
The survey of 18,000 people found that, on average, people of working age begin saving at 30, five years earlier than current retirees. Today’s retirees only saved for 23 years, seven years less than the new generation.
Another feature common to both the UK and Australia was a reliance on property as a source of retirement income: 22 per cent of Brits and 26 per cent of Australian expect either to sell or downsize their property to help fund their retirement.
There was also a common feeling that people were not saving enough for their retirement, with 38 per cent saying they wished they had started to save earlier, and 28 per cent saying they should have saved more by putting aside a larger share of income.
Charlie Nunn, HSBC’s group head of wealth management said: “People recognise that they are living longer and may not be able to rely solely on more traditional forms of funding for their retirement, including state provision.
“As a result, they are realising they need to start saving for retirement earlier than previous generations and to consider alternative methods to help fund their retirement. Even small amounts set aside today can go a long way to helping fund a comfortable retirement in the future.”
Jon Gwinnett, product technical manager at Nucleus, said the 37 year projection was about right, but added it relied on people contributing an appropriate amount. He said current auto-enrolment contribution rates were far from enough to provide for retirement, even after 37 years.
He urged the government not to put off increasing the auto-enrolment contribution rate, saying 12 per cent, or possibly more, was the desired rate.
He went on: “Unlike some of our European neighbours, we know we are not going to be funded by the state or by paternalistic employer schemes. The trouble is, we don’t have enough free funds to save,” he said.
james.fernyhough@ft.com
