FCA: 15 million people have no private pension despite AE

In its report Understanding the financial lives of UK adults, the regulator said almost half (49%) of all UK adults - including retirees - do not have a private pension, equating to 15.1 million people.

Among non-retirees, the self-employed and the unemployed are twice and three times as likely as the employed to have no private pension cover, it said.

The report found age to be a major factor affecting pension saving, with fewer than half (49%) of 18-34 year-olds saving into pensions, while three-quarters (77%) of those aged between 45 and 54 have a pension they have not yet accessed.

In his speech at the Investment Association's annual dinner on Tuesday evening, FCA chief Andrew Bailey highlighted the problem among young people saving.

He said: "Over the last few decades we have seen a big shift in responsibility for long-term saving, notably for retirement, from the state and employers to individuals. 

"This has in the last decade been accompanied by conditions of very low real interest rates which have substantially increased the cost of long-term saving and led to conditions where there is real concern that for many people, and particularly younger people, the retirement saving rate is too low.

"But, to be very clear, this is not a criticism of younger people. We have a substantial inter-generational saving and asset-ownership issue on our hands today."

Relying on state pension

A third (32%) of those over 50 without a private pension said they did not have one because they believed it was too late for them to start one.

More than a quarter (26%) said they could not afford to pay into one, and just more than a tenth (12%) said they planned to rely on a partner's pension.  

The research found the state pension was the main income source for 44% of UK retirees. Women are more likely to rely on the state pension (53%) than men (33%).

AE: 'Millions left behind'

Hargreaves Lansdown head of policy Tom McPhail said while auto-enrolment has been "an incredible success," millions have been left behind.

"Low earners, the young, part-time workers, the self-employed and people working past retirement age all risk missing out on the generous top-ups available. The sooner the benefits of this fantastic system can be extended to help more of the population, the better," he said.

"Neither the government nor the regulator has any kind of clear policy to encourage more saving and investing; it isn't even part of the FCA's statutory objectives. We'd like to see this challenge given greater priority by the government as it has profound implications both for individuals and for society more generally."

According to The Pensions Regulator, some eight million employers have completed the AE declaration of compliance, meaning the total number of workers auto-enrolled is 27,364,000.

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• Topics
• Retirement
• Regulation
• FCA
• auto enrolment