An increasing number of people in the UK are saving nothing for their retirement, a survey from pension provider Scottish Widows has revealed.
The eighth annual Scottish Widows Pensions Report 2012, which is compiled from the findings of a survey of 5,200 UK adults, shows that 22% have put nothing aside for later life, up from 20% in last year’s report.
Moreover, retirement savings have hit an all-time low as only 46% of people are currently saving enough for their retirement, a decrease of five percentage points from last year and a fall of eight percentage points from 2009.
Even though people are saving less for their old age, expectations remain high: people’s aspirations for their pension income have increased by GBP200 since last year. The average level of annual income that people say they would feel comfortable living on at 70 years old now stands at GBP24,500, compared to GBP24,300 in 2011.
Based on today’s savings levels an average saver retiring at 65 would receive just over half the amount that they feel they need, which means that they would need to save an additional GBP4,500 per year or GBP375 per month to plug this expectation gap, Scottish Widows claims.
Scottish Widows considers people saving adequately to be those saving at least 12% of their income or expecting their main retirement income to come from a defined benefits pension.
Starting in October this year the UK government is introducing a system of automatic enrolment of employees into a pension scheme. Reflecting on the change, Ian Naismith, head of Pensions Market Development for Scottish Widows, said that it presents an opportunity to reverse the current trends and called on the government to launch a compelling awareness campaign so that people clearly understand the need to save for retirement.