No change to retirement savings levels, says report

Business Correspondent/Personal Finance Editor

Wednesday 8 June 2011

There is no change in the "ingrained inertia" across the UK around saving for retirement, according to the seventh annual Scottish Widows Pensions Report, which shows the savings index stuck stubbornly at 9%.

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The index tracks the percentage of income being saved for retirement by UK workers not in a final salary pension, and is still well below the 12% Scottish Widows believes people should be saving to achieve a comfortable retirement.

Nearly half of those who need to be saving for retirement are failing to do so adequately, and a fifth are failing to make any provision at all for their retirement, despite three-quarters agreeing that they ought to take personal responsibility for their future.The index looks at those between 30 and state pension age who earn more than £10,000 a year, and shows that although 51% are currently saving enough, that is largely due to the influence of final salary pension schemes. Excluding those outside such a scheme, the figure drops to around 25%.The report reveals little change before and after the financial crunch, with those preparing adequately fluctuating only between 48% and 54% since 2007. On average, the desirable retirement income is seen as £24,300 or over £2000 a month – a sharp drop from the £27,900 two years ago.The average age at which people would like to retire remains unchanged from 2010, at 61 years and eight months. The latest they want to retire remains at 66 and six months. Only one in five said that would be happy to still be in employment at 70. The report says: “Surprising-ly, respondents claim that they are able to put aside an additional £97 per month on average for the long-term in 2011 – this is an increase following a drop in 2010. However, people are failing to do so.” Ian Naismith, head of pensions market development for Scottish Widows, said the average shortfall on providing for an acceptable income in retirement was £58 a month. He commented: “That is roughly the cost of a cup of coffee every day. Even though for many this is realistic, and is under the average £97 per month people say they can afford, we appreciate the difficulty in setting aside extra money.”Mr Naismith went on: “It’s about breaking through that inertia ... it’s about taking small steps, getting on to the savings ladder and, more importantly, staying on it.”

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No change to retirement savings levels, says report

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