More than 20 million adults in the UK will be relying solely on a state pension when they retire, with saving for later life seen as being a low priority by the vast majority of people.
A third of today’s adults have no pension provision other than their state allowance, meaning that millions of people are likely to struggle in retirement – if they are able to stop working at all, that is.
The findings have been published by Scottish Friendly, which also said people should consider tax-free Isas alongside pension plans. The research found that more than half of adults are using Isas, but not with the intention of boosting their later-years income.
About 25% of people intend to rely on company pension schemes to fund their retirement, but only 4% are using Isas to help prepare for retirement.
“Pensions clearly have a role in saving for retirement, and we applaud the government’s recent proposals to make pensions more flexible and accessible,” said Neil Lovatt, of Scottish Friendly.
“However, we feel that an ‘Isas first, pensions second’ strategy could serve some people better.
“Even though the government’s proposals are an improvement on the previous system, people who have invested in a pension still have their money tied up until they reach a certain age. By investing in Isas, consumers have a more flexible route to retirement planning.
“By moving savings into a pension later in life, it’s locked up for a shorter period of time. Any contribution to an Isa, even as little as £10 a month, is a good place to start. If you use your Isa first, you can benefit from the access and flexibility it provides throughout your retirement.”