The ninth annual Scottish Widows Pensions Report reveals a slight decline in the level of preparation for retirement compared with last year, meaning adequate provision is at an all-time low. However, there are signs that more people are now making the effort to save for retirement, but not at high enough levels.
The lower dependence on defined benefit provision, which we noted last year, has continued, and is not being compensated for by an adequate level of defined contribution savings. There has also been a significant widening of the gap between men and women at younger ages.
The Scottish Widows Pensions Index
The Pensions Index measures the current adequacy of provision by those who could and should be preparing financially for their retirement.
– Only 45% are making enough provision for their retirement, down from 46% in 2012.
– The fall in the Pensions Index is a result of fewer people who are not relying mainly on a defined contribution pension saving at the benchmark 12% level.
– 20% are saving nothing in 2013, compared with 22% in 2012.
– The gender gap between men and women is 9%, up from 7% last year. 49% of men are currently saving adequately, compared to 40% of women.
– The age gap is similar to last year. 53% of over-50s are preparing adequately, compared with 42% of those between 30 and 50. More women over 50 are saving adequately this year than last year, but fewer men. This finding is reversed for those under 50, with only 36% of women aged 30-50 saving adequately.
– Currently 55% of those earning over £30,000 are saving adequately, but only 40% of those earning between £10,000 and £30,000. This is similar to 2012, but there is evidence of lower savings among those earning over £50,000 a year.
The Scottish Widows Average Savings Ratio
The Average Savings Ratio focuses on those who are not relying on a defined benefit pension for their main income in retirement, and measures their savings for retirement as a percentage of total income.
– The Average Savings Ratio for 2013 is 9.1%,up from 8.9% in 2012.
– The increase is a result of more people saving between 6% and 12% of income, and also of fewer non-savers than last year.
To view the full report click here
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