Retirement saving reaches record high, but 6.2million Brits failing to put anything away
24 June 2015
- 56% now saving adequately for retirement
- 6.2m people still not saving anything at all
- £7,800 annual shortfall in desired retirement income remains
The Scottish Widows Retirement Report revealed that outside of pension savings, people are saving on average £142 a month towards their retirement, rising 8% from £130 last year. Almost one in five (19%) expect to save more over the next 12 months and 40% feel positive about their long-term financial situation, up from 37% last year.
For the first time in 10 years, the average proportion of earnings being put away each month towards retirement has reached the 12% recommended by Scottish Widows – more than twice the level in 2006 (6%) and a third higher than in 2013 (9%).
Despite the recent raft of reforms designed to shift retirement planning higher up the nation’s financial agenda, there has been no improvement in the number of non-savers since last year, with one in five people (20%) – around 6.2million – not saving at all for retirement, the same level as recorded in 2009. This is the equivalent of double the population of Wales. A similar proportion of people have no savings or investments whatsoever, increasing from 17% last year to 19%.
The research found that the savings gap is widening among the self-employed and those working for small businesses, with 39% of self-employed people and 30% working in a small business not saving anything at all, up significantly from 23% last year.
Meanwhile 43% of those with annual personal incomes under £10,000 are failing to save anything for retirement, compared to 24% of those earning up to £30,000 and just 9% of those earning more than £30,000 a year.
The study of 5,000 UK adults highlighted a clear disparity between expectations of retirement income and the reality of how far savings will stretch. Whilst the average income Britons aged 30-65 believe they would need to feel comfortable in retirement is £23,469, people saving at the current average level can expect an annual income of £15,600 in retirement – an annual shortfall of over £7,800.
Ian Naismith, retirement expert at Scottish Widows, said: “Since we began our research over a decade ago, a record proportion of people are now saving adequately for the future, showing that the unprecedented changes in the pensions industry have gone some way to engage the nation with retirement saving.
"Despite the positive signs, causes for concern remain, as savings levels among the self-employed and those working for small employers declined this year. The final years of rolling out automatic enrolment will be crucial as it reaches those who have previously not had the opportunity to participate in a workplace pension.
“Our research shows that confusion remains around how actions today translate into money tomorrow, with many people retaining unrealistic expectations about what their income in retirement might be. Both the industry and the Government need to continue working together to help people understand the living standard their savings might produce in real and tangible terms. Having a plan in place, starting to save earlier and putting aside more for later life will mean people will be better prepared to close the retirement aspiration gap.”
Note to editors
The Scottish Widows UK Retirement Report – first launched in 2005 as the Pensions Report – monitors pensions savings behaviour annually using the Scottish Widows Pensions Index and the Scottish Widows Average Savings Ratio. The research was carried out online by YouGov across a total of 5,191 UK adults over the age of 18 from March-April 2015.
The content of this news release is intended for information only and should not be relied upon for making investment decisions. Whilst every effort is made to ensure the content of this news release is accurate at the time of publication, Scottish Widows plc disclaims liability for any losses, disputes or claims which may arise as a result of the use of this information.
For further information please contact:
Kim Hamilton, Scottish Widows: firstname.lastname@example.org / 0131 655 5450
 This is taken from the Scottish Widows Pensions Index: ‘Population’ refers to those aged 30 or over, who are not retired, and are earning at least £10,000 a year
 Individuals are considered to be saving adequately if they are putting aside at least 12% of income for retirement (including any employer contributions to pension) or expect a defined benefits scheme to provide their main retirement income. Adequate savers are still likely to experience some fall in their living standards in retirement.
 Among those who should be saving – those aged 30 or over, who are not retired, and are earning at least £10,000 a year
 This is based on the UK working population being 31.10million (ONS labour market statistics May 2015), and the population of Wales being 3.06m (Census 2011).
 A company with between 10-49 employees.
 This is calculated by taking the average earnings for those earning £10-50k, working out their monthly contribution towards their pension using the Scottish Widows Average Savings Ratio, and working out how this, combined with the state pension, would translate into a retirement income.