Fresh warning on pension saving

By THIS IS MONEY
Updated:

 

ONLY half of Britons are on course for an adequate income during retirement, a report said today. Just 55% of people are saving at the levels they need, falling to 30% if people who are members of final salary pension schemes are excluded.

Workers aged over 30 who are not members of final salary schemes are saving an average of just 9.3% of their income each year, but Scottish Widows estimates they must set aside at least 12% to have a satisfactory living standard during retirement.

The average was boosted by a minority saving around 20% of their income, but one in five people were saving less than 6% of their pay and 17% of workers were setting aside no money at all.

The research found that it was not simply a lack of affordability which was preventing people from saving - one in three of those failing to pay into a pension earn more than £30,000 a year.

Instead it said the barriers to saving were more likely to by psychological than financial. Among people who earned the same amount, non-savers were more likely to believe a reduction in their spending would seriously affect their standard of living.

Non-savers were also less content with their current lifestyle than savers, more likely to have significant debts, less likely to own their own home and twice as likely to be smokers as savers were. But non-savers were more likely to be prepared to work for longer than those who were saving, with a third saying they were willing to work until they were 70.

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Overall, more than half of non-savers were willing to retire at or after the age of 65, compared with just 33% of those who were making adequate provisions.

Ian Naismith, head of pensions market development at Scottish Widows, said: 'This report shows that our decision to save or not to save for retirement is highly complicated, perhaps more so than has been considered previously.

'Factors to take into account include not only income, age and levels of understanding but also individual psychology. Our saving patterns are strongly influenced by our general attitudes to life.

'While a low income may stop us saving, our findings show that a high income does not necessarily mean we will save.'

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