'Under-saving' for retirement alert

Updated: 
The proportion of people who are saving enough for their retirement has fallen to its lowest levels in at least nine years, a report has warned.

Less than half (45%) of those surveyed by Scottish Widows were found to be making adequate provision, marking a new low since research started in 2005.

A retirement savings gender gap is also on the increase, with 40% of women putting enough by compared with 49% of men.

The widened gap has come from a drop in the proportion of women who were preparing adequately, from 42% last year.

One-fifth of men and women combined were saving nothing at all for their old age and more than a third were "under-saving".

People were seen as preparing adequately if they were saving at least 12% of their income or expecting their main retirement pot to come from a "gold plated" defined benefit (DB) pension which offers a guaranteed level of income such as a final salary pension.

The typical level of income people felt they would need in retirement was £25,200. But based on what pension savers were putting away, the report estimated they were more likely to end up living on around £11,400 a year, including their private and state pension.

The proportion of people saving enough for their pension has generally been on a downward slide since a peak of 54% of people who were saving enough in 2009, according to the annual report.

Ian Naismith, a pensions expert at Scottish Widows, said: "People are now less prepared for retirement than at the height of the downturn a few years ago, yet expectations for income in retirement are still increasing. As a nation we must either prioritise saving for the future and prepare accordingly, or seriously adjust our outlook for old age."

The research was based on people earning over £10,000 a year and aged 30 and over. More than 5,000 people took part in the study between February and March across the UK.

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