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Scottish Widows report: UK saving hits all time low

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Saving levels in the UK have hit an all time low following a “perfect storm” of economic uncertainty and a rapidly ageing population, Scottish Widows warns.

A new report by the provider, published today, suggests just 45 per cent of those who “could and should” be preparing financially for old age are saving enough.

This figure is based on the assumption people who are aged 30 or over, who are not retired and are earning at least £10,000 a year should be saving at least 12 per cent of their income or expecting their main retirement income to come from a defined benefit pension.

It is the lowest figure recorded since Widows first published the annual study in 2005. 

Scottish Widows head of pensions market development Ian Naismith says: “We are being hit with a triple-whammy of, firstly, continued economic uncertainty making it difficult to save for the long-term; secondly the age of first time buyers is rising as we face troubles getting on the property ladder and thirdly an ageing population. 

“These factors combined create a perfect storm for those heading towards retirement.

“As a nation we must either prioritise saving for the future and prepare accordingly, or seriously adjust our outlook for old age.”

The report also found a huge gap between the income people expect to retire on and the amount they are saving.

Widows says the total pension pot for an average saver would be £122,000 in today’s prices, providing an annual pension of £3,860. 

With the addition of the state pension the average person’s retirement income would rise to £11,400 – less than half the £25,200 annual income people expect to receive in retirement.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. “Glimpses of the obvious”. How can Scottish Widows expect anything else when they offer such a miserably low rate of interest to savers?

  2. This sort of thing is exactly why our industry is held in such low esteem.

    Those with transparent vested interests are paying for research that provides the answers they require, so that they can (in our industry parlance) draw up the hearse and let the punters smell the flowers.

    What seems to have escaped their notice is that with increasing longevity and better health there are many who regard lazing around with nothing specific to do as a really horrible prospect. We now have legislation to allow older people to work as long as they are capable.

    However if these self-proclaimed do gooders are worried about people retiring with debt, how about reversing the current legislation where insolvency and bankruptcy are so easily excused. Perhaps we need far sterner measures for the financially feckless, that will concentrate minds and lead to a better personal finance environment.

    That it is a truism that only higher rate taxpayers should pay into a pension (unless you have a decent contribution from your employer) and that the proceeds of a pension are taxed and the residue is unreachable seems to have escaped their notice.

    They seem to have overlooked that many now prefer ISAs and buy to let. With the former the income is tax free and the fund is accessible at all times. (Unless the Westminster bandits renege yet again!)

    With Finance For Lending, Buy To Let now looks to be a pretty good option – again retaining control over the whole asset.

    Of course they also find in convenient to ignore the theft by Gordon Brown and the disinclination of this Government to reverse it. The idea of simplification had merit, but successive legislation (by all governments) just cannot resist tinkering and what was once fairly straightforward has now reverted to impenetrable complication. And these numpties in their Ivory Tower wonder why people have lost interest in pensions.

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