Warning bells sounded over shrinking pension pots

Warning bells sounded over shrinking pension pots

Warning bells have been sounded over an increasing number of savers approaching retirement without sufficient savings. 

Pension administrator Equiniti has warned the transformation expected as a result of auto-enrolment and pensions dashboards will do little to help those set to enter retirement facing a future reliant on state benefits. 

According to analysis by Equiniti, median occupational pension savings for those aged between 55 and 64 have fallen by 38 per cent over the past four years - from £115,000 in 2012-14 to £71,000 in 2016-18. 

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This drop of £44,000 has raised concerns millions could enter retirement without funds to support themselves, despite the introduction of auto-enrolment in 2012 and pension freedoms in 2015. 

Duncan Watson, chief executive of Equiniti’s pension business, said: "It is alarming to see so many people within 10 years of reaching the state pension age are looking likely to enter retirement with so little reserved in their occupational pension savings.

"Innovation through auto-enrolment and pensions dashboards will transform the pension industry in this country, but this will be of little comfort for those whom will largely be unable to benefit from the reforms."

Mr Watson said the figures should act as a "warning light" for those beginning careers, who he urged to start contributing a pension. 

He added: "Starting to contribute to a pension is the hardest part in having to sacrifice a chunk of the monthly pay cheque, but it will become second nature and will make a huge difference to the quality of life people can afford forty years down the line."

The figures were drawn from data published by the Office for National Statistics this month, representing pension wealth in the UK from the period of April 2016 to March 2018. 

Equiniti said this data also showed a "stark difference" between public and private sector savings, with those aged 55 to 64 in the public sector having a median workplace pension savings of £181,100 and those in the private sector having pots roughly seven times smaller at just £27,000.

The pension administrator pointed to the increased likelihood of public sector employees being in defined benefit pension schemes as a driver for this contrast. 

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