Records at five-year high, according to new report
The number of people saving adequately for retirement at 53% is the highest it has been since 2009 and the biggest ever year-on-year rise, up from 45% in 2013, as the impact of auto enrolment and improvements in the wider economic environment begin to take effect.
T he monthly amount people are saving towards retirement outside a pension has also increased by 141% from £54 in 2006 to £130 in 2014, and the total amount people have in savings and investments is at its highest ever level; an average of £40,000 per person, according to the tenth Scottish Widows Retirement Report. Even when discounting those who have large amounts of savings, this represents an increase of almost £5,000 on 2013 levels alone – from £28,964 to £33,678.
An important role
Auto enrolment is playing an important role in increasing the number of people preparing adequately for retirement, with the average proportion of earnings put aside for employees of companies with 250 staff or more increasing from 9.7% to 11.6%. This is almost four percentage points more than the long-term minimum required under automatic enrolment of 8% of earnings, which shows that people are increasingly understanding the importance of long-term savings for retirement.
Improving attitudes towards finances and the wider economy have also played their role, with 37% of people saying they felt optimistic about their long-term finances compared to 32% in 2013.
Reasons of affordability
The proportion of people who cite affordability as a reason why they don’t plan to save any more over the next 12 months continued to fall from 71% in 2012 to 68% in 2013 and 59% in 2014; the number of people free from debt reveals a positive trend, increasing from 13% in 2012 to 14% in 2013 and 16% in 2014.
The proportion of people who cite affordability as a reason why they don’t plan to save any more over the next 12 months continued to fall from 71% in 2012, to 68% in 2013 and 59% in 2014; and the number of people free from debt reveals a positive trend, increasing from 13% in 2012, to 14% in 2013 and 16% in 2014.
The Pensions Index covers those who could and should be preparing financially for retirement – those aged 30 or over, who are not retired and are earning at least £10,000 a year. Saving adequately is those saving at least 12% of their income or expecting their main retirement income to come from a defined benefits pension.
The Scottish Widows UK Retirement Report, which first launched in 2005 as the Pensions Report, monitors pension’s savings behaviour annually using the Scottish Widows Pensions Index and the Scottish Widows Average Savings Ratio. The research was carried out online by YouGov, who interviewed a total of 5,055 UK adults over the age of 18 in March 2014.