More people failing to save for retirement

| May 21, 2012
More people failing to save for retirement

The proportion of people with no pension savings has grown from 20 per cent to 22 per cent over the past year, according to Scottish Widows’ latest survey.

The pension provider surveyed 5,200 adults in the UK, aged 30 or over, and earning at least £10,000 a year, for its annual review of pensions.

Ian Naismith, head of pensions market development at Scottish Widows, said: “People failing to make any kind of provision for their later years are in a particularly precarious position.

“Some may think that they will be able to fall back on the state pension, property or a partner’s pension and while these options may provide some level of support, saving nothing for retirement could be a fast track to financial problems.”

According to the report, people who are saving for their pensions tend to have unrealistically high expectations of the value of the future pension they will be able to afford.

Many workers could be facing poverty in old age, Scottish Widows suggests, with just 46 per cent of people saving the minimum amount in a private pension needed for a comfortable retirement, compared with 54 per cent in 2009.

The government’s planned reforms of the state pension should help parents who stay at home to look after their children, and other carers.

Under the reforms they will be treated as if they had worked throughout their lives and will receive the full-state pension for the first time.

Previously, workers needed a minimum 30 years of contributions to receive the full pension, with the entitlement being reduced for each full year they were not employed.

Mothers and carers who retire from 2015 will receive a flat-rate payment of at least £140 a week under the reforms, which are being introduced to simplify the state pension system.

However, the state second pension will end, meaning that wealthier workers will be worse off.

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