A new report has revealed a dramatic deterioration over the last 12 months in the number of people in the UK saving adequately for retirement. This provides one of the starkest warnings yet that Britons are simply not saving enough for their old age.
The Scottish Widows Pension Index, which tracks the percentage of the population saving adequately for retirement, fell from 55% in 2005 to 46% in 2006.
Meanwhile, the company’s Average Saving Ratio, which tracks the percentage of income being saved for retirement by UK workers not expecting to get their main retirement income from a defined benefit scheme, dropped from 7.9% to 5.8%. This falls significantly short of Scottish Widows’ recommended target savings ratio of 12% of earnings.
The survey comes just a day after another study found that the number of defined benefit schemes accepting new members in the UK is seemingly in irreversible decline.
The deterioration in the index and the ratio is very disappointing when you consider how high profile pensions have been in the last 12 months, says Ian Naismith, head of pensions market development at Scottish Widows.
In fact, our figures show that four in every five people who aren’t relying on a final salary pension are failing to save adequately for their retirement, and that two in five are saving nothing at all. With this level of under-saving, no-one can be in any doubt about the challenge facing us all when it comes to preparing for retirement.