One in five adults are more likely to spend their spare cash at the end of the month on a shopping spree or a holiday than save for retirement, claims Aon Consulting.
Research of 1,680 adults in full or part-time work, highlights UK employees regard paying into pensions only slightly more important than buying the latest gadgets such as an iPod or Playstation Portable (PSP).
Pension saving was only most important to 4% of employees, just above 2% who buy the latest gadgets, and 1% who buy lottery tickets, meanwhile 2% of those surveyed say they don’t do anything with money left over at the end of the month.
According to the survey, the most popular uses for spare cash were to pay off existing debts, chosen by 42% of respondents, while 29% put the money into a savings account, and 20% spend it on a holiday or shopping spree.
The research also highlighted some regional variations in people’s attitudes to disposable income, with employees in the north of England at 25%, favouring their holidays and shopping sprees much more than the 15% in Wales and the South West.
Meanwhile, the paying of debts was considered most favourable in London at 45% and the Midlands with 44%, while London was also the only region to consider paying into a pension, with 6%, more important than the 3% who go on a shopping spree.
Richard Cox, client relationship director at Aon Consulting, says with only 4% of individuals putting their spare cash into a pension scheme, the survey highlights funding for retirement is incredibly low down in people’s list of priorities.
He adds: “Even amongst the 55-64 year age group nationally, only 7% would further invest in their pensions. UK employees can’t afford to take a short term view on pensions. As life expectancy increases and the number of final salary schemes decreases in favour of defined contribution schemes, it means the responsibility for saving has shifted from the employer to the employee.”
Cox warns every employee with an occupational pension scheme, no matter how young, should seek advice on how much his or her pension fund will actually provide in retirement.
He says: “This way, individuals have the choice of investing more of their disposable income or working longer to achieve a fulfilled retirement. Inaction is not an option.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
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