proposed system of personal pension accounts, will go some way to addressing the problem with its automatic enrolment pension saving structure, it will not address the basic issue."

General lack of understanding
The data reveals what may be the root cause of the expectation gap: a general lack of understanding of pensions among the UK population. A third of non-retired respondents (31%) do not know what to expect their approximate annual income in retirement to be; and although this decreases with age, almost a fifth (19%) of those aged 55 and above still do not know what to expect.

State retirement income

• 85% of respondents do not fully understand what retirement income they are entitled to from the state.  Of these:
  
  
  • 23% of respondents who are not already retired admit they do not understand at all what retirement income they are entitled to from the state.
  • 34% of non-retired respondents have a limited understanding of what retirement income they are entitled to from the state. 
• While the level of understanding of state pension provision does increase with age, nearly a third (30%) of those aged 55 and above who are not already retired have little understanding, or do not understand at all, what their state retirement benefit entitlements are.

Employer-sponsored pension fund

• Only 18% of non-retired respondents who have a pension fund have no understanding at all of what retirement income they are entitled to from it.
• 54% of non-retired respondents who have a pension fund have a limited understanding, or do not understand at all, what retirement income they are entitled to from it.

Lynda Whitney said:

"Addressing the problem at the basic level is just one of the ways of starting to solve this problem. Government and employers have a responsibility to find ways of increasing general awareness or understanding or they face the risk of sleepwalking into a potentially catastrophic shortfall in retirement funding."

Individuals must adjust expectations
While government and employers must address the issue of awareness, Hewitt has highlighted the need for individuals to consider a 'triangle of compromise': pay more, work longer or receive less.

However, when faced with the shortfall in pensions, a quarter of respondents were unwilling to consider any kind of compromise in their behaviour and expectations. Only 10% were prepared to consider retiring on less money. 27% of participants were willing to pay higher pension contributions (compared with 46% in 2004) and 16% were unable to make a decision.

Lynda Whitney added:

"On one level it would seem that higher pension contributions and an acceptance that you will have to retire later are both going to be required.  Raising the state pension age may encourage later retirement but other questions remain – will further increases in NEST be needed, or is compulsion the answer?

"What seems clear is that iindividuals have to adopt a triangle of compromise: a combination of retiring later, paying more into a pension during your working life, or taking lower benefits on retirement. While none of these alone can solve the problem, by accepting a compromise we can avoid the predicted crisis."

Notes to Editors

About the 2004 survey
This survey was conducted by Taylor Nelson Sofres on behalf of Hewitt Associates between the dates of 12th and 14th October 2004. The survey reached 1,238 adults between the ages of 16 and 64, weighted to represent the adult population of Great Britain.

About the 2010 survey
The YouGov survey interviewed 2,171 people in the UK over the age of 18, of which 1,691 were not already retired. Research was conducted online between 30th March and 1st April 2010.

About the figures
* We have used information from the YouGov survey questions weighted by with the proportion of survey respondents' answers to estimate the average pension expectation, retirement age and current level of contributions.

** To calculate this we used the data from the YouGov survey to determine the average pension that an individual might receive based on their expected retirement age and current saving. The calculation assumes that retirement saving starts at age 22, and includes an estimate of future investment returns, annuity rates and levels of state provision.

About Hewitt Associates 
Hewitt Associates (NYSE: HEW) provides leading organisations around the world with expert human resources consulting and outsourcing solutions to help them anticipate and solve their most complex benefits, talent, and related financial challenges. Hewitt works with companies to design, implement, communicate, and administer a wide range of human resources, retirement, investment management, health care, compensation, and talent management strategies. With a history of exceptional client service since 1940, Hewitt has offices in more than 33 countries and employs approximately 23,000 associates who are helping make the world a better place to work. For more information, please visitwww.hewitt.com.