The newly published seventh report on the state of retirement savings from Scottish Widows has just been released and it doesn’t make particularly pleasant reading. Whilst there does seem to be a slight increase in consumer understanding of pension provision, particularly in the public sector, the sad fact is that we are still a nation where around half the population still does not contribute adequately to a pension and around one-in-five is actually doing nothing at all.
Here are some of the main findings:-
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Only 51% are making enough provision for their retirement. This is up from 48% in 2010, but below the 54% in 2011.
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20% are saving nothing in 2011, compared with 21% in 2010
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The gender gap between men and women has fallen to the lowest on record. 53% of men compared to 50% are preparing adequately.
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The age gap has widened, with 59% of over-50s preparing adequately for their retirement, compared with 47% of those between 30 and 50.
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The income group which currently appears to be preparing best for retirement is those earning between £30,000 and £50,000. It appears that high-income groups are not as focussed on retirement provision.
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London is the region currently preparing worst for retirement, while Wales and the West Midlands are best-placed this year.
Characteristics of different savings groups
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Most people who are saving adequately are typically, male, married and in the latter part of their career. They are also relatively modest earners. They are likely to expect a decent company pension but may also have significant savings of their own.
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Those who are somewhat under-saving (6-12% of income) are often younger than adequate savers. Generally they work in the private sector and have more than one pension arrangement.
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Those who are seriously under-saving (up to 6% of income) are largely mid-career and may well earn a relatively decent income. They may well have high levels of debt and are self-employed or work for a small company.
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Common characteristics from the non-savers include having relatively low income, being single or divorced and are likely to change job frequently.
These type of reports may well be packed full of statistics and mumbo jumbo, but I do think they perform a vital role in helping us understand how we can begin to implement change in a nation that appears to be largely indifferent to the concept of planning for a financially secure retirement.
The report goes onto look at the likely impact of automatic enrolment and NEST which will begin to get rolled out in October 2012. Support for automatic enrolment does appear quite strong with only 11% expected to opt out.
This is a subject I will be covering a lot in the coming months, primarily because it is such big news in the pension world. However if any employer or individual needs any more info at this stage please don’t hesitate to drop me a line.
