Advisers say constant Government tinkering with pension rules has driven the UK to becoming the worst country in the world at saving for retirement.
Last week, HSBC published a report titled “The Future of Retirement: A New Reality”, which found the average Briton spends 19 years in retirement. However, a combination of rising life expectancy and inadequate contributions means their savings will run out after an average of just seven years.
This means the average Briton’s savings only cover 37 per cent of their retirement income, with the rest coming from other sources such as the state or employment. Some 19 per cent of British people are saving nothing at all.
In a research project that spanned 15,000 people across 15 countries, Britain had the lowest level of savings for retirement.
Malaysia was the best nation analysed with its citizens saving 71 per cent of their needed retirement income.
On average globally, people are storing up enough to cover their income needs for 56 per cent of their retirement.
In the report, HSBC group head of wealth management Simon Williams says: “There are, of course, many obstacles to saving, including the lack of a regular savings habit and the financial impact of unexpected life events.
“Unfortunately, the impact of saving too little or too late will only become clear in later years, when people find they are retiring without the necessary income to support an active and fulfilling retirement.”
Hargreaves Lansdown head of advice Danny Cox says: “This is not altogether surprising and the Government is trying to address this through automatic enrolment.
“That is just a start though and ultimately contributions will go up.
“Successive Governments have messed about with pension rules and that has undoubtedly drained peoples’ confidence in the system.”
Cox wants the Government to make it easier for financial services firms to advertise their products.
He says: “The Government could do a lot more to free up advertising and make it simpler for financial services companies to promote their products.
“At the moment you can advertise gambling or payday loans with a two-page code of conduct but for financial services it is a 38 page code. That cannot be right.”
AWD Chase de Vere head of communications Patrick Connolly says: “Uncertainty around the rules governing pensions has not helped encourage people to save in the last 20 years. Greater stability in the system would definitely be a good thing for the UK.
“The big challenge now is to get people to realise they have to do something because, quite understandably, most people are focused on paying off debt or saving for a house.”