UK - Approximately 60% of the UK population not currently saving for retirement claim they cannot afford to put money aside, a study by Scottish Widows has revealed.
Findings from the Scottish Widows Pensions Report 2008 showed the percentage of employees saving adequately for their pension has increased from 49% to 51% - of which 33% expect to rely on defined benefit (DB) schemes and 18% on defined contribution (DC) income - while the number of people not saving at all has dropped to 18%.
Women are still saving less for retirement than men as 22% of non-savers are women compared with 15% of men, although Scottish Widows revealed the gender gap has narrowed to 9% compared with 13% in 2007.
The annual survey of 6,381 people over the age of 18 revealed 65% of “adequate” savers are men, while 45% of individuals saving enough for retirement work in the public sector, even though they account for just one-third of the workforce.
In addition, the figures suggest the role of employer-sponsored pension schemes appears to be in decline, as only 48% of respondents felt their company scheme would help ensure a reasonable standard of living in retirement, compared to 60% in 2007.
The report said the decline of DB schemes and the possibility of ‘levelling down’ benefits “appear to be impacting people’s perceptions about how committed their employer is to maintaining a workplace pension”.
Despite this, the report found more people believe pensions are generally more secure, as 57% described pensions as “very” or “quite safe” savings vehicles compared with 44% in 2007.
The research also showed 18% of respondents are not saving at all, and 60% of these claim they cannot afford to put any money aside for savings, while 44% of those without a private pension believe they will never contribute to one.
Survey results also found 59% of people claim they cannot afford to save any additional assets in the next 12 months, while 61% of people earning between £10,000 (€12,500) and £30,000 a year claim they do not have spare money to put into a pension.
Scottish Widows highlighted evidence suggesting non-savers are more likely to be female, while parents with children under the age of five, the self-employed and people with short-term debt may also be at risk of under-saving or not saving at all.
The annual report - which uses two measures to monitor pension savings behaviour - did reveal the amount of income saved for retirement by workers not in a DB scheme increased from 7.9% in 2007 to 8.7%.
However, it warned this gain - primarily from non-pension savings - was offset by subsequent withdrawals from short-term savings vehicles, such as ISAs, so the overall level of savings held in non-pension vehicles failed to increase.
The report also revealed individuals are less optimistic about their financial futures, as 37% are worried about having no income in retirement, while 32% are pessimistic about short-term finances and 29% are worried about the long-term financial situation.
Ian Naismith, head of pensions market development at Scottish Widows, pointed out while pension savings are starting to rise, “there is the still the real worry that in the current economic environment the nation is not doing enough to prepare for retirement”.
“There is a distinct sense of pessimism emerging from our results, with consumer confidence falling compared to last year,” said Naismith.
“Many people just don’t see how they can afford to put anything extra aside and this doesn’t look to be improving over the coming months. With the cost of living rising and the nation struggling to make ends meet the outlook isn’t getting any brighter,” added Naismith.
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