Scottish Widows is calling on the Government to launch a “compelling” communication campaign to encourage people to save for retirement, as research shows pension savings have hit record lows.
Research from Widows, published last week, shows just 46 per cent of people are saving enough for their retirement compared with 51 per cent in last year’s study and a high of 55 per cent in 2005.
The company defines people who are saving adequately as those saving at least 12 per cent of their income – four percentage points higher than the auto-enrolment minimum – or expecting their main retirement income to come from a defined-benefit pension.
The figures are based on a survey of 5,200 UK adults.
Widows head of pensions market development Ian Naismith says: “These are alarming findings. 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 ageing population and ongoing economic difficulties it has never been clearer that we need to do more to shift people quickly from their rose-tinted expectations of retirement.”
From October, the UK’s biggest employers will have to enrol all eligible employees into a workplace pension scheme.
The reforms will be rolled out gradually to all businesses between 2012 and 2018. The minimum total contribution will be 8 per cent of band earnings from October 1, 2018.
Naismith says: “Auto-enrolment presents a once-in-a-life-time opportunity to reverse these trends. 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.”
Hargreaves Lansdown head of advice Danny Cox says: “It is difficult to see how a comms campaign in isolation can reinvigorate retirement savings. I am also not convinced the Government will want to spend vast amounts now on something that would benefit future Governments.”