25th June 2014
Construction workers are almost twice as likely to be on track with retirement plans as those working in retail, engineering and manufacturing.
A new report by pensions and savings firm Aegon reveals that only 1 in 20 of those working in retail, engineering and manufacturing are even close to being on track for a satisfactory retirement1, while those working in Transport and Logistics (9%) fared significantly better. The UK average is seven per cent.
When it comes to the income people hope to receive in retirement, those working in the construction sector have the most ambitious expectations, aiming to receive £42,000 per year, but this is much more than the £14,000 they are on course to receive.
IT professionals also have heavily inflated expectations, hoping to see £39,000 a year when they retire, while those in education (£24,000), healthcare (£27,000) retail (£25,500) and transport and logistics (£21,500) had much more realistic expectations.
Construction and property workers are currently putting aside the most for retirement, with retirement income projected to pay them £14,000 a year, but this is still a vast £28,500 short of their expectations. Those in transport and logistics had much more modest shortfalls of £10,000, as did education workers (£11,500), those working in retail (£12,000) and Administration (£14,000).
Aegon has also created a retirement readiness scoring system, which provides a mark out of 100, after asking a series of questions, giving people an indication of their readiness for retirement.
Based on the survey, people working in Transport, Logistics and distribution achieved an average readiness score of 55 out of 100, well above the average of 52. Much more worryingly those working in human resources (51), retail (50), administration (51) and hospitality and events management (both 50) all had scores that fell short of the national average, suggesting that more needs to be done to help workers prepare for retirement.
More than half (56.4%) believe that the maximum basic state pension was higher than £110.15 per week, with those in construction, property, transport and logistics the most likely to overestimate the state provision.
Professionals across the board are also expecting to retire earlier than the state pension age. By 2018 the state pension age will be 65 for both men and women. According to our survey, at the moment the UK is expecting to retire earlier, at around 63 years of age.
In light of this optimism, perhaps most concerning is that nearly a third (30%) of respondents have never looked to change their retirement plans, and 42 per cent have never checked the performance of their existing retirement savings. Those in retail are by far the most disengaged, with over half (52%) admitting they have never checked the performance of their savings.
David Macmillan, managing director, Aegon UK says: “It’s clear that workers in certain professions are falling behind when it comes to getting ready for retirement, and that many aren’t reviewing savings enough to be aware of the shortfall. It’s time to get real, and for the pensions industry to lead the way in helping both workers and industry heads find solutions. Showing people the small steps that will make a difference is vital. We must empower, rather than frighten people, and help them take control of their future finances.
“Aegon is committed to getting the UK ready for retirement and I’m delighted therefore to announce the arrival of Retiready, which will not only help show people how their retirement pot stacks up against their ambitions, but also provide valuable coaching and support to help get them back on track.
“For the first time we can help people understand where they are on their journey to retirement with a quantifiable readiness score. Retiready is an invaluable digital service for all those preparing themselves for later life and represents a huge leap forward for Aegon and the industry as a whole.”