Three in five saving adequately for retirement
April’s auto enrolment step-up has had an immediate positive impact on saving habits, according to Scottish Widows’ Retirement Report.
The report found the number of people saving enough for a comfortable retirement has hit its highest ever level, with 59 per cent of Brits saving adequately for the future. This is a significant improvement from the 55 per cent proportion recorded 12 months ago.
It’s not all good news though. Scottish Widows also found the proportion of people not saving at all for later life remains static at 17 per cent. Almost a fifth of UK adults (22 per cent) – about eight million people – don’t think they’ll ever be able to afford to retire.
Who are never-retirers?
Those who think they’ll never be able to retire are more likely to have no pension savings at all (35 per cent of this group, versus 26 per cent national average), with more than half (51 per cent) expecting to rely solely on the State Pension in later life.
Scottish Widows found never-retirers are likely to be those who are already financially vulnerable. They have an average income of £21,500 a year – significantly below the UK average salary of £27,396 – and are much more likely to have faced a financial emergency in the past, such as an unexpected bill or a sudden drop in income.
This group are understandably anxious about making ends meet: 85 per cent of never-retirers are concerned about running out of money in retirement, compared to 53 per cent of the wider population, and almost three in five (63 per cent) are worried they will have to work when they are no longer fit and healthy.
Young still not saving enough
Scottish Widows said the number of under-30s not saving for retirement has fallen dramatically thanks to auto enrolment. Almost half a million under-30s started saving for the first time in the past two years, with four in 10 (40 per cent) 22 to 29-year-olds now saving adequately. This is a significant uplift from the 30 per cent recorded in 2017.
But this still leaves three in five young people saving below the recommended level for a comfortable retirement, with 14 per cent of 22 to 29-year-olds not saving anything.
Peter Glancy, head of policy at Scottish Widows, said: “One in five people say they’ll never be able to retire. With no further step-ups in auto-enrolment contributions planned, this is a timely reminder that bold action must be taken to ensure no-one has to face the spectre of poverty in their later years.
“While the past 15 years have proved that things have been changed for the better, auto-enrolment alone won’t avert a pension crisis in the UK. Government and industry need to take the next step together and stop pretending the long term savings challenge can be solved in isolation.”