Friends Provident’s survey claims that a fifth of people believe that they could survive retirement on a lump sum of £50,000, but this only works out at a quarter of the weekly minimum wage to live on.
“The continued lack of understanding of pensions is a serious issue and by ignoring this, the British people are facing a pension time bomb,” said Jeremy Ward, head of pensions marketing at Friends Provident.
“This is a wake up call for consumers to start saving sooner rather than regretting it later.”
News comes with the proposed shake up of the pension system which means that many now face an uncertain future over the condition of state pensions.
Although current state pensions would top up the lump sum payments to £128.49 per week to live on, this still falls short of minimum wage payments and leaves little money to spare after the payment of essentials.
With pensioners liable to face rising utility and other bills, Friends Provident fears that unless people start preparing now, they will face their retirement stuck in debt.