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More than one in five failing to save for retirement

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More than one-fifth of people in the UK are failing to make any provision for their retirement, a survey by Scottish Widows has found.

The report, which covered 5,200 UK adults, found that 22 per cent of people were not saving for retirement, up from 20 per cent in 2011. The Scottish Widows Pensions Index looks at those between 30 years-old and state pension age who earn more than £10,000 per year. It also found 54 per cent of adults polled are failing to save adequately for retirement, a record number up 5 per cent from 49 per cent in 2011.

While retirement savings are falling, the report found people actually want a £200 increase in their annual pension income, from £24,300 in 2011 to £24,500 this year.

The report says the average saver, calculated on a £25,000 salary and 8.9 per cent saving rate between age 30 and age 65, would receive around half this target if they retire at 65.

It states the total pot for an average saver is around £150,000 in today’s terms which would only provide an annual pension of £5,700.  With the addition of the state pension this would generate a yearly income of approximately £13,000 which is well short of the £24,500 annual income people are looking for and would mean a total shortfall of £300,000.  To meet current expectations, an average saver would need to save an additional £4,500 a year or £375 per month to make up the difference.

Scottish Widows head of pensions market development Ian Naismith says: “These are alarming findings as UK pension provision has hit an all time low.  People are saving less for old age yet their expectations remain high as the majority fail to recognise the harsh reality of retirement. With an aging population, and ongoing economic difficulties, it has never been clearer that we need to do more to shift people quickly from their unrealistic ‘rose-tinted’ expectations of retirement.  They must either increase their savings substantially or change their expectations of when they might retire and how much income they will receive.

“Auto Enrolment presents a once in a lifetime opportunity to reverse these trends.  But for this to be successful we need a compelling Government communications campaign to make clear in simple and understandable terms the need to save for retirement.” 

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. 4 out of 5 dont earn enought to save anything for their retirement

  2. Scottish Widows received my retirement savings for many years.When it came to paying me I only 25% of my expectations.I now live in poverty.

  3. In April 2011 the Joseph Rowntree foundation calculated that a couple with 2 children now require a gross income of £29,900 p.a. (a 4% increase on 2010) . This included just 1 weeks holiday a year in the UK (No foreign holiday)

    The Office of National statistics calculated the median salary in November 2011 to be £26,244p.a.

    With wages in many instances frozen and cost of living rising significantly (especially basics such as food and heating) why is anyone suprised by these findings?

    Forcing people to save via auto enrollment will only further limit money in peoples pockets and further restrict consumer spending. In an economy that is dependant upon consumer spending for growth we can only concur that the current ecomomic policy is towards lower consumption, lower growth and a complete downsizing of both current lifestyles and retirement expectations.

  4. I have been in the industry for a long time now and I hear this every year.

    Constant Government meddling has done nothing to help the situation but the bottom line is that people can either ill afford to save for retirement or live in the spend now worry later world.

  5. John Spederson 22nd May 2012 at 1:10 pm

    Scottish Widows, piffpaff we are all too skint to save, can’t get a mortgate can’t buy a house….tell us something that we don’t already know. why not do some research to see what would fix it……i know a new goverment rather than our current encombent ass clowns

  6. Daphnie Jenkins-Smyth 22nd May 2012 at 1:28 pm

    The government need to have a good hard look at themselves….posh boys indeed.

    I bet none of them have had to eat a brown sauce sandwich because that was all that was left in the cupboard or watch the disappointment in they eyes of a child because one weeks dole doesn’t cover the price of a Barbie doll at xmass and that there is nothing these people can do as there a no jobs, no houses and trying to get a loan….

    I’m fortunate, neither have I, I have always been well off but I don’t pretend to know how it feels not like these pretend pasty eating buffoons. The other lot as just as bad….sausage roll munching morons

  7. Is it not good that Scottish Widows is promoting this awareness? It’s all very well and good people saying “tell us somethng we don’t already know” but clearly a lot of people don’t know this or they would be saving for retirement.

    Simple reductions in your day to day living expenses can free up cash for retirement – do you really need those 900 channels on Sky TV for example or that £60 per month gym membership or 2 weeks in Majorca every year or take away on a Friday night?

    Reality is that the State Pension Age is drifting out and unless people start looking after themselves they only have themselves to blame if they don’t have enough at retirement.

    Stakeholder pensions are designed to accept miniscule contributions so there really is no excuse.

  8. Malcolm if someone saves a miniscule amount into a stakeholder pension all they are doing, under current legislation, is reducing the amount they would receive from the pension credit and why would you do that?

    The problem is that government and the media give too many negative vibes on pensions – rip off charges etc. which simply gives people the excuse not to save for retirement!

  9. ….150K in the average pot…. I bet its more like 15K… but hey, why not fund this customer detriment from the FSCS levy…

    ….while i-thingys and HD television are are cool and pensions are not, then fings aint gonna change… yep, the Widows reseach is commendable but the input needs to be altered if we want a different outcome….. – but hey!… we have auto enrol(l)ment at 2% of band earnings… we are saved!!!

    Time to go back to the drawingboard – variants of existing legislation are not working, it needs a blank sheet of paper…

  10. “ Ian you should talk internally about 3PPS as alternative solution to close the savings gap, Scottish Widows have had a more insight than most so far, if this is something new to you I suggest you have a look at March 2012 edition of PMI news, then get internal dialogue open again. Just to give you a pointer talk with A.B.”

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