Less than half saving enough for retirement

More than half of those who could, and should, be preparing financially for later life are not saving enough and one in five is saving nothing at all, according to a report by Scottish Widows.

Of those aged over 30, not retired and earning more than £10,000 per year, just 45 per cent were found to be making 'adequate' savings of at least 12 per cent of their income. This is down by 1 per cent on the 2012 figure.

Despite this lack of adequate provision, expectations for retirement income and the level of debt with which people enter old age are rising. The Scottish Widows survey found that the level of annual income people would feel comfortable living on aged 70 has increased by £700 in the last year, and now stands at £25,200. However, it also revealed that a third of those already in retirement are still paying off average non-mortgage debts of £5,682.

Scottish Widows pensions expert, Ian Naismith said: "We are being hit with a triple-whammy of, firstly, continued economic uncertainty making it difficult to save for the long-term; secondly the age of first time buyers rising as we face troubles getting on the property ladder and thirdly an ageing population. These factors combined create a perfect storm for those heading towards retirement. Whilst we are becoming more aware of the need to save for retirement, we must do more to ensure that we have a comfortable old age."

In other pension news, analysis by Prudential found that self-employed workers are missing out on employer pension contributions of £2,232 per year, based on the average UK salary of £26,664. Over the course of a 41 year average working life, this amounts to £91, 512 that self-employed workers (who do not have the option of joining a company pension scheme) miss out on.

Retirement expert at Prudential, Stan Russell, said: "Self-employed workers have to be even more proactive when it comes to saving for retirement, as they can't benefit from employer contributions in a company pension scheme. Saving into a pension gives valuable tax relief, while professional financial advice can be helpful in ensuring that they're saving enough for a comfortable retirement."