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Pensions not considered a retirement funding source for 44 per cent of Brits

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Nearly half (44 per cent) of people do not currently expect to use a pension to fund their retirement, according to research from Baring Asset Management.


Nearly half (44 per cent) of people do not currently expect to use a pension to fund their retirement, according to research from Baring Asset Management.

This is equivalent to 15.7 million people aged over 18 who are not yet retired. 

When asked to select which assets or investments they view as funding their retirement, a pension was chosen by just 56 per cent of people, highlighting a lack of effective pension planning by a significant number of UK adults.

The research shows that many people are relying on property, cash and even an inheritance to fund their retirement. The number of people expecting that cash will form part of their retirement planning increased from 26 per cent in the last survey in 2011 to 29 per cent this time (some 10.5 million people). The number that selected property as forming part of their retirement fund also increased two percentage points to 29 per cent, equating to some 300,000 more people.

Even more surprisingly, according to the research from Barings, 17 per cent of people, or six million in the UK, said they expect inheritance to help fund their retirement. This expectation is more acute for people in the A/B social segment (the upper and middle classes): nearly one in four (23 per cent), said that inherited assets form part of their retirement planning, up from 20 per cent in the last survey in 2011. However, with the average UK inheritance estimated at around GBP45,000 per person, many people may be overestimating the role inherited assets may play in helping fund a retirement.

Marino Valensise, chief investment officer at Barings, says: “It is very surprising to see just how varied retirement funding sources have become for many people in the UK. While diversification is crucial to best-practice asset management, the suitability of some of these sources can be questioned, such as a reliance on inheritance. Overall, the most challenging finding is that nearly half of the adult UK population admit to not having a formal pension at all.”

The study also found that one in four (25 per cent) – 8.8 million people – admit they simply do not know how they will fund their retirement.

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