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Regional “retirement readiness” gap revealed

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New research from Phoenix Insights, the longevity think tank from Phoenix Group, shows workers aged over 45 in Greater London and the East of England have over 40% more in retirement savings* on average compared with those in the Midlands and the North. Total savings in these regions average less than £98,000 – far below the £248,000 the Pensions and Lifetime Savings Association (PLSA) estimate is needed for a moderate standard of living in retirement – highlighting the urgent need to do more to help close the pension savings gap across the UK.

Phoenix Insights polled 2,500 workers aged over 45 across nations and regions in the UK, to capture how expectations and preparations for retirement vary across the country. To illustrate the severity of the regional gaps Phoenix Insights has launched an interactive pensions heatmap that paints a full “retirement readiness” picture, enabling people to understand more and discuss some of the challenges the different regions of the UK face.

As the UK’s largest long-term savings and retirement company, Phoenix Group set up Phoenix Insights to help rethink what is needed for people to be prepared for their longer lives and helping to close the pensions savings gap is a vital aspect of that. This latest research shows the urgent need for change.

Phoenix Group’s Patrick Thomson, Head of Research Analysis and Policy at Phoenix Insights, said:

“People across the UK are living longer lives than their parents and grandparents and unlocking opportunities they never had. But this isn’t being felt evenly around the country. Most people are not saving more to reflect the fact they may be retired for longer, and many are starting to think they might want or need to work for longer than they planned, often in order to meet their retirement income needs or help their loved ones financially too.

“To enjoy fulfilling longer lives, Phoenix Group recognises that we all need to think differently about our futures, and the futures of those we care about. The journey to retirement has already changed for many people, with some reducing their hours in the run up, others embarking on second careers later in life or actively choosing to work beyond state pension age for a variety of reasons. There are also those who have left the workforce early due to ill health or through caring responsibilities.

“Our research shows that we can’t afford to take a one-size-fits-all approach to solving things. We need to look at better opportunities for employment and savings, and the government’s approach must reflect the needs of all parts of the UK to make a real difference to people’s longer lives.”

Key findings of the research

The heatmap shines a light on the five regions and cities that have currently saved the least and the most for their retirement.

Average pension savings amongst UK workers aged over 45

Top five regions with the least savingsTop five regions with the most savings
North West (£91.4k)
Yorkshire and Humberside (£97.6k)
East Midlands (£98.1k)
West Midlands (£98.4k)
South West (£101.7k)  
Greater London (£144k)
East of England (£136.7k)
South East (£121.5k)
Scotland (£118k)
Northern Ireland (£114k)
Top five cities with the least savingsTop five cities with the most savings
Nottingham (£78.9k)
Plymouth (£80k)
Manchester (£87.6k)
Leeds (£96.7k)
Liverpool (£96.9k)
Southampton (£144.1k)
London (£133.8k)
Cardiff (£132.7k)
Brighton (£128.4k)
Edinburgh (£124.0k)

People aren’t talking about their plans for retirement

As the increasing cost-of-living continues to bite across the UK, making decisions about saving for the future is becoming more challenging. Many share similar concerns as they financially prepare for retirement, and more than half (55%) of workers aged over 45 report feeling uncomfortable or unsure about talking about how they’re doing it.

People worry they won’t have enough to live on

A quarter (25%) of workers over 45 across the UK said they definitely won’t have enough money to live on when they retire. This figure rises to nearly three in 10 (28%) people living in Scotland, Wales and the South East, compared to two in 10 in the East Midlands (21%) and the South West (22%). The survey also found that over a third of workers surveyed (36%) worry they will need to dip into their savings before retirement. This was particularly concerning for those living in Greater London (45%) and the West Midlands (42%).

People worry they will have to work past State Pension age

While some people may wish to work beyond their State Pension age of 66, six in 10  (60%) of workers in the North East, Greater London and Wales worry they will need to work past this point, compared to just over half (52%) of those in the North West and Yorkshire & Humberside. 

Some people do not know what their main source of income will be in retirement

Over one in seven (15%) do not know where their main source of income with come from when they retire, rising to one in five (19%) of those in the East Midlands, and those in the North East (48%) and Wales (43%) most likely to rely on personal or workplace pensions. Workers from Northern Ireland (38%) and the South East (33%) were amongst the most likely to be reliant on the State Pension as their primary source of income, while those in Greater London are the most likely to rely on income from other investments (8%).

Across the UK, Phoenix Insights found that peoples’ expected main source of retirement income was a strong indicator for how much they had saved; with those expecting to draw mainly from private or workplace pensions typically having over £180k in retirement savings, compared to those relying on the State Pension (£46k), and those drawing income from investments (£219k).

Government must take a regional approach to address pension savings imbalance

To tackle the regional disparities found in retirement readiness, Phoenix Insights is urging the Government to go further to ensure that everyone has the tools and support they need to engage with their pension savings earlier. This includes considering policy at a regional and local level to target action on under-saving, adapting it to the local economy and savings challenges.

To support regional action, the Government delivering on its commitments to lower the automatic enrolment thresholds will increase pension participation across the UK, and committing to a timeline to enact changes to the advice and guidance boundary will ensure that more people can access reliable and tailored financial support.

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