Just 15% of respondents view tax-free pension contributions as an incentive to save, according to research by PricewaterhouseCoopers (PWC).
Its survey of 1,197 UK workers also found that 59% of respondents are put off from saving more into their pension because of a lack of understanding about how the pension system works.
Further findings include:
- 63% of female respondents and 64% of younger respondents aged 18 to 34 say a lack of understanding about pensions is a barrier to saving.
- Respondents contribute an average of 5% of their salary into their pension, and contribution levels do not increase with age.
- Respondents’ employers make a 6% pension contribution on average.
- £22,200 a year is the average retirement income desired by respondents, rising to £28,700 a year in London.
- Respondents between the ages of 18 and 34 would like a retirement income of £23,100 a year on average.
Raj Mody, head of pensions consulting at PWC, said: “It is clear that many people’s expectations of their pension pot and the reality at retirement will be very different [because] people simply aren’t contributing enough to their pensions.
“Any system that is asking people to lock up their money for many years needs to be simple to understand, trusted and sustainable to encourage greater savings levels. It also needs to include a strong up-front incentive.
“Our survey suggests that the pensions system in its current form isn’t incentivising people to save.”