Record numbers saving ‘adequately’ for retirement
The Scottish Widows Retirement Report found that 53 per cent of people are saving adequately for their retirement, up from 45 per cent in 2013.
This represents the biggest year-on-year increase since the report began 10 years ago.
The average total amount in savings and investments per person -after discounting those who have the largest amount in savings, which skew the average higher – has increased year-on-year from £28,964 to £33,678.
According to Scottish Widows, the proportion of people who say they will not save in the next six months because they cannot afford to has fallen from 68 per cent in 2013 to 59 per cent in 2014.
Auto-enrolment has also played a vital role in encouraging people to save. The average proportion of earnings put aside for employees of large companies – those with over 250 employees – increased from 9.7 per cent to 11.6 per cent, well above the eight per cent minimum required under automatic enrolment.
Ian Naismith, pensions expert at Scottish Widows, said: “A decade of tracking retirement savings trends has shown us that events such as the recession, auto-enrolment and the recent Budget announcements have had on the nation’s savings behaviour.
“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 proactively 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.”
Despite the positive trends, one in three people say they have no idea to what extent their pensions, savings and investments will meet their retirement income needs. And, while 37 per cent of people say they feel optimistic about their finances compared to 32 per cent last year, optimism still lags far behind 2005 levels.
As it stands, a third of Britons believe they will be worse-off in retirement than their parents were before them.
Naismith concluded: “Although we have undoubtedly made some significant strides forward since our research began, there are still some groups who are not preparing adequately for a comfortable later life and are at risk of slipping through the net.
“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.”