Record low pension savings coupled with “retirement expectations drastically at odds with reality” may be damaging prospects for a comfortable retirement according to a recent report.
The Scottish Widows Pension Report 2012 suggested that just 46% of Britons are saving enough to meet the needs of their retirement, down from 51% recorded by SW in 2011.
Ian Naismith from Scottish Widows said:
“Some may think that they will be able to fall back on the state pension, property or a partner’spension and whilst these options may provide some level of support, saving nothing for retirement could be a fast track to financial problems and serve poverty in later life.
“When we are faced with immediate financial commitments, such as bills and mortgage payments then it is right and proper to give these priority.
“However, taking a short-term view of your finances will not help to close the gap between the UK’s current pension provision and the desired level of retirement income. Those putting holidays and travelling before saving for their pension need to urgently rethink their priorities to have any chance of enjoying a comfortable retirement.”
A survey conducted by the National Employment Savings Trust (NEST) suggested “low confidence, rather than unwillingness, may be one of the main reasons for people not saving enough for their later lives”. 71% of those surveyed agreed that they may not have put enough away to provide for retirement years because they don’t want to make the wrong decision on savings options.
Tim Jones, CEO of NEST, said:
“Too many people are putting off setting money aside for their later lives because they don't know what to do or don't want to think about retirement.”
Changes to pension law to be phased in between 2012 and 2017, including the introduction of auto-enrolment, are designed to simplify the pension saving process and encourage a higher level of saving for retirement.
A lack of pension saving may be partially responsible for an increasing number of pensioners remaining in work beyond state pension age, with figures almost doubling to 1.4million since 1993.
A report released yesterday by the Consumer Credit Counselling Service suggested a rise in the number of over 60s seeking help with mortgage arrears has risen by 44% since 2009, copared with an average rise of just 3% across other age groups.
Delroy Corinaldi, CCCS director of external affairs, said:
“This is a trend which we will need to monitor closely. It is particularly worrying given the current low interest rates.
“With many older people taking higher levels of debt with them into retirement, this could be the start of a long-term trend towards far higher levels of mortgage difficulty in later life.
Also commenting on the CCCS report, Michelle Mitchell Charity Director General of Age UK said:
"Many people in later life are struggling to cope with the tough economic climate. This alarming spike in the number of older people who are seeking help paying their mortgage shows just how bad things are.”