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Only 56% of workers saving for retirement

Paloma Kubiak
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Paloma Kubiak

The proportion of working people saving for retirement has remained static for the past year, and those who do save are starting later in life, a new report reveals.

While the proportion of people saving for retirement had been on an upward trend since 2013 and the introduction of auto-enrolment, the 2016 statistics showed no improvement on last year, remaining static at 56%.

Its twelfth annual Retirement Report further revealed that the proportion of people not saving at all remained at one in five, a slight drop to 18% this year from the 19% recorded in 2015.

The research carried out by Scottish Widows also found that workers believe they can afford to start their retirement savings at the mean age of 29.3 years, up from the 28.9 years recorded a year earlier.

The age at which most people would like to retire at has fallen to 62.5 years from the 62.7 years recorded last year.

At the same time, the proportion of people relying mainly on defined benefit (DB) pensions for their retirement income now stands at 24%, down from 28% last year, and well below the 36% recorded in the first edition of the Retirement Report in 2005.

Income-wise, of the 5,000 people surveyed, they believe they will need £23,990 for a comfortable retirement, up from the £23,254 noted in 2015.

This year’s research revealed a ‘troubling trend’ among the 40-49-year-old age group as along with those aged 30-39, they have the lowest adequate savings levels.

Scottish Widows said the number of non-savers in their 40s is also up to 19% this year from 16% in 2015, despite the fact that on average, there are fewer people not saving this year compared to last.

Robert Cochran, retirement expert at Scottish Widows, said: “With three solid years of improvement behind us, it is disappointing to see that savings levels are starting to plateau. Particularly worrying is the fact that savings levels among those in their 40s drop off at a time in life when retirement may be within 20 years.

“The light at the end of the tunnel in this picture is the long-term impact of auto-enrolment, which is clear to see from our twelve years of research. Auto-enrolment has already brought six million new workplace savers into pensions and with the minimum contributions for employers and employees set to rise in coming years, we expect average levels of savings continue will rise.”