FCA: 10m do not have a pension in accumulation

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Nearly 10m adults did not have a pension in accumulation in May last year, the Financial Conduct Authority has found. In January, 6% of scheme members had stopped or reduced pension contributions. 
 
Nearly a quarter (24%) of UK adults – 9.7m – who were not retired did not have a pension in accumulation in May last year, and 9% did not know, according to new figures from the FCA. 
 
Its latest Financial Lives Survey shows that those least likely to have a pension in accumulation were the same groups as those excluded from automatic enrolment – 18 to 21-year-olds (12% had a pension), the unemployed (24%), people with income below £15,000 a year (39%) and the self-employed, where just over half (53%) had a pension, compared with 84% of employees. Women were less likely to have a pension in accumulation than men (65% compared with 71%) but slightly more likely to have a defined benefit pension in accumulation (24% compared with 22% for men). 
 
Future surveys could show a slightly different picture as legislation to expand auto-enrolment to those aged 18 to 22 and to make contributions count from the first pound earned is currently at committee stage in the House of Lords, and is expected to become law in the coming weeks. 
 
Among those who were not retired, including those not in paid work, 67% had a pension in accumulation in 2022, with 49% having a defined contribution and 23% a DB pension. About four-fifths (79%) of all adults in work had a pension in accumulation. Even though 67% had a pension in accumulation, just 59% had a pension receiving contributions from themselves or their employer in May 2022. 
 
The rising cost of living since May last year has impacted people’s finances, leading some to reassess their pensions further. The FCA’s follow-up research in January 2023 found 6% of active pension scheme members had stopped contributing to a pension or reduced contributions – and 6% of those aged 55 and over had cashed in their pension or taken a lump sum to cover day-to-day expenses. More than half (56%) had stopped saving or investing, saved lower amounts or used savings to meet daily expenses. 
 
While the cost of living impacted many of working age, 85% of retirees were coping financially despite the higher living costs, particularly those with DB pensions and those who had savings and investments. This echoes findings by the Institute for Fiscal Studies last year, which showed pensioner income after housing costs surpassed that of non-pensioners. 
 
    
Seven in 10 (71%) retirees had pension income or taken a cash lump sum last year. Among them, nearly a quarter (23%) were still in work.  
 
Women, people with a minority ethnic background and renters were less likely to have a pension in decumulation than men, adults not from a minority ethnic background and homeowners. 
 
Resilience among non-retired people remains poor. In May last year, 4.4m adults (8%) could only cover their living expenses for up to one week from savings. About 17.1m (32%) could cover their living expenses for less than three months, while about half had at least three months’ savings to survive on if they lost their main income. Previous iterations of the survey showed similar results in 2017 and 2020. 
 
In January this year, 70% of adults were in a worse financial situation, as 71% had no or less disposable income than six months earlier, 29% had higher unsecured debt, 21% felt heavily burdened by keeping up with bills, and 12% had missed one or more bills in the previous six months. 
 
What needs to change to strengthen people’s financial resilience? 

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