One in three workers do not have a pension

One in three people employed within the UK do not currently have a pension, according to a new study.

Nearly 15 million workers said that they donít have a private or company pension, meaning that they will rely on the state pension to support them financially in retirement.

Yet with the latest government reforms on state pensions, many of these people could be left with very little.

The government recently announced a raft of pension reforms, meaning that the pension ages will be pushed back to 67 with thousands of people losing out.

1.5 million public sector workers are expected to announce their intention to hold a nationwide strike against the reforms.

The reforms to public sector pension schemes mean that workers will have to increase their contribution to pensions and work  for longer. 

The maximum increase will be at 2.4% starting from April 2012.

Civil service employees currently contribute between 1.5% and 3.5% towards their state pension. The reforms are expected to affect 2.5 million people across England, Wales and Scotland.

The latest research from Prudential found that those who currently have a pension contribute an average of 6.2 % of their annual income to pension schemes.

The survey of 1,602 working adults found that women are far less likely to save for their retirement, with 41% saying that they do not currently have a pension compared to just 29% of men.

The Office for National Statistics found that the average worker in the UK earns almost £1 million over the course of their working life. Yet many do not take advantage of tax relief.

The average tax relief on pension contributions is £334 per year, per person paying the basic tax rate. Higher tax payers could lose a significant amount by not paying into a pension scheme.

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Vince Smith-Hughes, head of business development at Prudential, said; “Failing to save into a pension means not only having to rely solely on the State Pension in retirement, but also missing out on the ëfree money boosts’ which come with pensions, such as tax relief and employer contributions.î

“Making regular pension contributions is a vital part of securing a comfortable retirement. Although saving for retirement may not be a priority for young people, the more money which is stashed away from an early age, the more likely that significant rewards will be reaped later in life.î

“When coupled with the benefits of any additional employer contributions or gains through fund performance, a pension is the best way of saving for retirement, for many people.î

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