More failing to save for pension, says Scottish Widows

Ramblers Many people will be automatically signed up for a pension when a new system starts soon

A growing number of people are failing to save anything for their retirement, according to a survey.

Some 22% of those aged between 30 and state pension age and who earned at least £10,000 a year were not putting anything aside, Scottish Widows said.

The pension provider, which questioned 5,200 UK adults, said this figure had grown from 20% a year ago.

The government is introducing a system of automatic enrolment of employees into a pension from October.

This will be phased in over six years. The government intends that between four and eight million more workers will be recruited into existing company schemes, or alternatives set up to cover other workers.

'Precarious'

Every year an increasing number of people do not have any pension provision, the Scottish Widows annual review of pensions suggested.

"People failing to make any kind of provision for their later years are in a particularly precarious position," said Ian Naismith, of Scottish Widows.

Auto-enrolment criteria

  • Most workers will be enrolled if they are aged between 22 and the state pension age
  • However, these workers must be earning at least £8,105 a year
  • Pensionable earnings will be those between £5,564 and £42,475
  • Staff need not join the National Employer Savings Trust (Nest) if they are recruited instead to another scheme that meets minimum standards
  • Workers can opt out

"Some may think that they will be able to fall back on the state pension, property or a partner's pension and while these options may provide some level of support, saving nothing for retirement could be a fast track to financial problems."

Many of those who were saving, he said, had unrealistic expectations of the income these savings would generate in retirement and the age at which they might be able to retire.

This is more of an issue for women than men, the report claimed.

Mr Naismith said that automatic enrolment offered an opportunity to reverse declining retirement savings, but it required a compelling awareness campaign from the government.

Under the new scheme, firms will either have to make sure eligible staff join their current employer sponsored pension schemes - assuming the schemes meet minimum standards - or recruit them into an accredited alternative scheme such as Nest (the National Employer Savings Trust) instead.

The obligation on staff and employers to make the minimum level of contributions - a combined 8% of earnings - will finally come into force in October 2018. Workers will have the option to opt out of the scheme.

Steve Webb, pensions minister, said: "With less than half of all workers today saving in a pension, there is a big under-saving problem in this country.

"Automatic enrolment will get millions saving, giving low and middle-income workers access to a pension, with a contribution from their employer."

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