British pre-retirees are in even worse shape than their Americancounterparts when it comes to saving enough for retirement.According to new research from J.P. Morgan Asset Management,British retirees are counting on state benefits and part-time workto fund their retirement, and almost half of pre-retirees admitthey currently save nothing for retirement, despite two-thirdsexpecting to rely on a pension for income.

When asked what their expected sources of income will be, 64%said they expect to use a pension for income in retirement, whilealmost half (47%) will use state benefits (up from 29% in 2006),and a quarter say they will work part-time. Only one in five (21%)expect to use other investments as a source of income in retirement(down from 41% in 2006), while others will rely on inheritance ordownsizing their home (14% apiece) and one in 20 (5%) will dependon equity release.

The research found 71% of men expect to use a pension as theirincome compared with 58% of women, with a higher percentage offemales relying on their spouse/partner to support them (22%compared with 15% of males).

When asked how much of their income they are currently savingtoward a pension, the nation's average is just 3%. At the extremeends of the spectrum, half of pre-retirees surveyed say they aresaving nothing at all for their retirement (52% of women and 39% ofmen), while 6% of those polled save more than one-tenth of theirincome.

Furthermore, when asked what level of pension income they expectto receive in retirement, more than half (53%) say less than 40% oftheir final pre-retirement salary. The average pension incomepeople are expecting to receive is 37% (on the national averagesalary of £26,500 this would be £9,805 a yearin today's money). Overall, the expectation is higher among malesthan females – men believe they will receive 40% of their finalsalary as a retirement income compared with one-third of finalsalary (34%) for women.

“If ever the nation needed a wake-up call to start planning andsaving for their long-term financial future and retirement thenthis is it. Worryingly, every second person is saving absolutelynothing for their retirement, yet on average people are expectingto retire on 37% of their final pre-retirement salary. Sadly, thenumbers just don't add up,” said Keith Evins, head of UK FundsMarketing at J.P. Morgan Asset Management.

Respondents were also asked what size pension fund they wouldneed to generate a pension income of £25,000 a year, andawareness is low. Sixty-three percent of UK adults admit they don'tknow. That percentage is even higher among those over the age of55. On average people believe that to generate an income of£25,000 per annum they need £380,061. This sumis higher among those who are 55 or older, with a mean answer of£476,550, compared with £289,216 for those whoare aged 18-34. At current annuity rates, as of March 11, 2013, a65-year-old with no health problems would need a fund of aroundhalf a million pounds to secure an annuity of£25,000.

“The situation is a worrying one, but people should notnecessarily panic. My advice is to take a step back from thesituation and start saving for the long term,” said Evins. “Thereare many points in favor of using pensions as a primary retirementsavings vehicle. No other type of investment is likely to offer theprospect of generous contributions from one's employer, for astart. But the biggest point in pensions' favor is undoubtedly thetax relief that is currently available, which means for abasic-rate taxpayer a £100 contribution only costs thesaver £80, or £60 for a higher-rate taxpayer.However, although pensions will usually be the beginning ofretirement planning, they should not necessarily be the end of it –which is where [individual savings accounts] come in.”

This article was originally posted at BenefitsPro.com, a sister siteof Credit Union Times.