Personal Pension  

Pension landscape changing: ACA poll

The body’s 31-page pension trends survey revealed a marked decline in the number of people expecting to retire at 65 by 2028 as they did not believe their occupational pension pots would be large enough.

At present, some 80 per cent of those polled expected to retire at the age of 65, with the remaining 20 per cent expecting to retire between the ages of 66 and 69.

However, by 2028, the trend is expected to have reversed, with 66 per cent expecting to retire between the ages of 66 and 69, and a further 19 per cent expecting to retire between the ages of 70 and 75 years old.

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The survey, which polled 308 employers with more than 430 pension schemes across all business sizes, also revealed that 66 per cent of all employers had a growing level of concern over pension spending.

Some 61 per cent expected their payroll costs to rise up to 2 per cent as a result of auto-enrolment, while 46 per cent of smaller employers expected a higher rise in payroll costs.

Despite these fears, a majority of all employers was yet to budget for the increased costs, with 53 per cent of firms with between 250 and 4999 employees, 65 per cent of firms with 50 to 249 employees, and 82 per cent of small firms with up to 49 staff yet to budget for the jump in costs.

Between 6 per cent and 10 per cent of large firms employing more than 5000 people expected employees to opt out of auto-enrolment schemes, with opt-out levels rising to between 26 and 30 per cent at small firms.

Meanwhile, some 57 per cent of employers supported the idea of automatic escalation in auto-enrolment pension contributions at a future date, and in line with increases in earnings.

Typical retirement ages (Source: ACA)

Below age 6060-646566-6768-6970-75Over 75
At present6%27%47%15%5%0%0%
By 20200%3%8%53%11%1%0%
By 20280%0%8%40%26%17%2%

Adviser view

Dean Smith, director of Bristol-based My IFA Friend, said: “I would agree with these figures. In my experience, small firms are not budgeting for auto-enrolment, and most people are resigned to the fact they will have to work in some capacity after 65. Unfortunately, there is no money and a continued apathy regarding funding pensions.”