Adequate levels of savings hit peak


Saving Up For Retirement

The proportion of people who are saving adequately for retirement has recovered to its best levels since 2009 as the benefits of Government pension reforms and wider economic improvements start to be felt, a report has found.

Some 53% of people were found to be putting enough by for their old age, meaning they are saving at least 12% of their income or expecting their main retirement income to come from a "gold plated" defined benefits pension such as a final salary scheme, the annual Scottish Widows Retirement report found.

The total amount people have in savings and investments has reached its highest ever level in the 10 years of the study, at £40,000 per person on average.

The monthly amount people are typically saving towards retirement has also surged by 141% from £54 in 2006 to £130 in 2014.

The report said that the Government's flagship scheme to automatically enrol people into workplace pensions has had an important part to play in preparing people adequately for retirement.

Some 3.3 million workers had been automatically enrolled into pensions by the end of April, according to the latest figures from the Pensions Regulator.

Improving attitudes towards finances and the wider economy have also played their role, with 37% of people saying they felt optimistic about their long term finances compared with 32% in 2013.

The proportion of people who cite affordability as a reason why they don't plan to save any more over the next 12 months continued to fall from 71% in 2012, to 68% in 2013 and 59% in 2014.

Meanwhile, the number of people who are free from debt continues to climb steadily, increasing from 13% in 2012, to 14% in 2013, to 16% in 2014.

But while optimism about long-term finances is on the up, it is still lagging far behind 2005 levels. Over half of Britons (51%) were optimistic about their long-term finances in 2005, compared with 37% in 2014.

One third (32%) of people do not believe they will be better prepared for their retirement than their parents were.

The research covers those who "could and should" be preparing financially for retirement - those aged 30 or over, who are not retired, and earning at least £10,000 a year. More than 5,000 people from across the UK took part in research for the 2014 study in March.

Ian Naismith, a pensions expert at Scottish Widows, said: "It is heartening to see that finally people are starting to sit up and take notice of the importance of planning for the future - whether this be through pro-actively upping their contributions due to a more favourable economic climate, or starting to make plans for their retirement for the first time thanks to auto-enrolment."

But he added: "While celebrating the success of the wider savings picture, we must not forget to identify and support these at-risk groups, such as the self-employed or part time workers, to make sure they too have a plan for securing their financial future and do not get left behind."

Pensions Minister Steve Webb said: "This rise in pension saving and the numbers preparing for retirement can only be good news.

"Our reforms are building on the success of automatic enrolment - which has seen over three million people enrolled into workplace pensions.

"The new state pension creates a strong and clear foundation for people to build their savings upon, our work to ensure fair charges will create confidence that savers are getting value for money and the new Pensions Bill will open new options for workers to prepare for retirement."

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