We all like to know how we are doing compared with others in life – it’s human nature.

We can tell ourselves that comparison is the thief of joy, because it is – we are all on our own path no matter what everyone else is doing

But sometimes comparisons helps us to understand if we are falling behind and need to make changes of some sort or tells us, actually, I’m doing alright.

The data I am using  is from the UK government office of national statistics Wealth and Assets Survey that is conducted roughly every 4 years, the latest of which was published in June 2022

This data tells us a lot about the trends and behaviours of people when it comes to pension savings. And it can tell you a lot about whether or not you are doing better than most, about average or that you’re falling behind so might want to consider what you can do to catch up

How many people are saving into a pension?

During the years surveyed in this report, April 2018 to March 2020, 57% of people between 16 and state pension age were contributing to a private pension. And what private pension means here is either a workplace DC scheme or a SIPP.

And this is compared with just 47% of people 10 years earlier.

Based on this trend, the next time the ONS publishes their wealth and assets survey, the number of people contributing to a private pension is likely to be higher than 57%

But if we take this figure then that means that just over 4 in 10 of working age adults are entirely dependent on the state pension for their retirement together with whatever additional savings and investments they have built up outside of a private pension fund.

Inequality in private pension wealth

Wealth is unequally shared across the population. This will not surprise you. What might surprise you is that there is significantly more inequality in pension wealth than total net wealth.

This figure from the ONS data shows how wealth is shared between individuals when split into 10 equally sized groups or deciles, sorted by private pension wealth as well as total net wealth.

Between April 2018 and March 2020, the top decile held 64% of all private pension wealth while the bottom five deciles held less than 1%.

• Median private pension wealth in the top decile was £637,500
• compared with £0 in the first three deciles,
• £1,200 in decile 4 and
• £7,800 in decile 5.

This really hits home the huge wealth inequality we have in this country when it comes to pensions.

When compared with total net wealth, the top 10% have 50% of the wealth

With pensions, the top 10% have 64% of pension wealth.

So there will be a lot of people who will not be having the retirement they hope for with this level of wealth inequality in pension savings.

The amounts saved

So we’ve looked at the comparative wealth, now let’s look at the absolute amounts saved.

We typically build our pension savings gradually over our working lives – perhaps lottery winners are the exception – before drawing on them to support our lifestyle in retirement.

As you would expect, the closer we get to retirement the more likely we are to have pension savings waiting to be drawn and the more valuable these typically are.

This makes perfect sense that older people have higher pension savings than younger – but how much does each age group have?

Women have lower pension wealth compared with men across every single age groups..

As expected, the pension wealth rises as we get older. The state pension age in the UK right now is 66 so if we look at how much people have in this age group, the median amount is £260,500 for men and £137,400 for women.

Using the very rough and somewhat controversial 4% rule this would give the average man £10,420 per year income from their private pensions to top up their state pension income and for women, £5,496

Pensions in Payment

So we’ve looked at the data for people who are still saving into their pensions – people who are still in what’s known as the accumulation phase.

Let’s now look at the data for pensions in payment, also called the decumulation phase.

The peak age group for people having active private pensions is currently 70-74, with 65-69 not far behind.

Only 39% of people 60-64 have active pensions, which is perhaps not surprising given that this age group is below state pension age.

You are one of the lucky minority if you’re able to retire below the age of 59 because only 13% of the population are in able to do so – well that is only 13% of those between 55 and 59 had active pensions in payment. It’s possible that some people can retire with alternative sources of wealth of course but we can imagine that this is an even lower percentage of people

Given that the age at which you can access most pensions is currently 55 and above then it’s not surprising that there are very few people who have pensions that are active below this age.

Pension wealth for pensions in payment

For those who have chosen to crystalise as soon as they can from the age of 55, the median amount is £384,100.

This is interesting because we don’t know what other wealth these people have and it doesn’t tell you anything about their circumstances, such as whether or not they are married or single and what pension wealth their spouse has.

And don’t forget this is the midpoint of the data, 50% of people will have active pensions with amounts below this for each age group and 50% will have a lot more.

Having said this, how do these figures compare with what you have in your pension if you are still in the accumulation phase?

Do you have a target pension amount in mind? How do these figures compare? Do they surprise you at all?

Or if you are in decumulation, if you’ve already crystallised, did you have a lot more or a lot less than these amounts at the age you retired?

Conclusion

I’m fortunate to have a helped a wide range of clients with a wide range in circumstances and individual wealth – in pensions and other assets.

We are all different with different goals in life.

Don’t forget that everyone has a different view of what retirement means to them. Some of us have no choice but to keep grinding away until we have enough to stop working completely. Many of us want more balance along the way and not risk waiting until the end of our lives to finally do all the things we want to do.

The data I’ve gone through in this video give you an indication of how well you are doing when it comes to your pension savings but life is too short to keep focussing on the pot of gold at the end of the rainbow.

How are you going to make sure that you enjoy life along the way while also making sure you invest for your future?