An IVA could clear the way for debt-free retirement
However, the company added that some people may be prevented from saving by problem debts – and anyone in this situation should speak to a debt adviser about debt solutions that could help, such as an IVA (Individual Voluntary Arrangement) or a debt management plan.
Research by financial services group Prudential found that almost a fifth (18%) of people planning to retire in 2010 would be relying solely on the State Pension and savings to get by, and did not have a specific pension fund.
The company also found that nearly a third (31%) of people surveyed were not sure how much they would receive on a State Pension, or overestimated the amount by £25 or more.
Martyn Bogira, Director of Defined Contribution Solutions at Prudential, commented: "Given that so many people expect to retire on the basic State Pension, particularly when only half know how much it pays, there is still a clear need for people to understand the consequences of not making adequate provision for their retirement."
But a spokesperson for Think Money said that many people who are not saving adequately for retirement would not be in that situation by choice, but would be unable to save due to existing debts and other financial pressures.
"There are a number of reasons why people might not save for retirement. Some people may decide their money is best used in other ways, while others might not give it much thought at all – and others simply can’t afford to put money into a pension.
"We advise all workers to put money into a pension if possible, and the earlier this starts the better – delaying the start date by just a few years can make a big difference to the overall pension pot available at retirement.
"These days, the State Pension alone is very rarely enough to cover a pensioner’s outgoings, and there is a risk of debt problems in retirement if they find they can’t cover their costs.
"Those who can’t afford to save for a pension should take a careful look at their finances to establish why that is. If existing debt repayments are leaving them with very little to put into a pension, then it’s important that they speak with a debt adviser about clearing those debts as soon as possible.
"There are a number of ways for people to clear their debts, and which one is right for them will depend on their circumstances.
"Even if the debts are completely unmanageable, an IVA could enable the borrower to repay a percentage of their debts, with the remaining debt being written off. There are a number of other solutions to help people struggling with debt, such as bankruptcy or a debt management plan. An independent debt adviser can help struggling borrowers to decide which debt solution is right for them."
Notes to Editors
One of the UK’s leading financial solutions providers, Think Money is based in Salford Quays, Manchester, and employs around 800 employees to deliver a comprehensive range of debt, loan, insurance and banking solutions.
Think Money defines its mission as ‘To educate, rehabilitate and advise on all aspects of financial management’.
For more information, contact Melanie.Taylor@thinkmoney.com (0845 056 6480) or visit the Think Money website at http://www.thinkmoney.com/.