As women over 50 have been hit hardest by the dip in pensions savings,
Scottish Widows is calling on this group to re-engage with pensions savings to ensure they prepare adequately for retirement.
Scottish Widows Pensions Report reveals that there has been a dramatic drop in pensions savings since last year and it is in fact at the lowest level since 2006.
The
Scottish Widows Pensions Index, which tracks the percentage saving adequately for retirement, has decreased from 54 per cent in 2009 to 48 per cent in 2010 and a fifth (21 per cent) of people who could and should are saving nothing at all.
The
Scottish Widows Average Savings Ratio, which tracks the percentage of income being saved for retirement by UK workers not expecting to get their main retirement income from a defined-benefit scheme is currently 9.2 per cent (a drop of 1 per cent from last year).
This falls almost three per cent short of the 12 per cent that Scottish Widows believe people should be saving to achieve a comfortable retirement.
"It’s clear from our research that there is a section of the population, largely made up of women over 50, who have become disengaged from pensions and savings,” said Ian Naismith, Head of Pensions Market Development,
Scottish Widows.
“They are disillusioned and are resigned to working right through their 60s and facing a large reduction in income when they retire.
“We must do everything we can to encourage them to re-engage with saving, and they must have confidence that any modest savings they can make won't simply result in a reduction to means-tested benefits.
"There is another group, largely made up of younger women, who have no interest in providing for their future. For them, the introduction of automatic enrolment could kick-start their savings, and we believe it is essential that the current review does not result in a delay in introducing pensions reform.
"Finally, we believe that removing tax incentives for high earners is likely to reduce employer commitment to pensions. We welcome the current review of the changes to pensions taxation proposed for April 2011.
“We recognise that any alternative will have to provide the same
savings in tax relief, but it is very important that there is no further erosion of pension tax incentives."
Key findings of the report:
- The gender gap has fallen - 9 per cent compared to 12 per cent last year but women still fall far behind men. Just 43 per cent of women are saving adequately compared to 47 per cent last year, whilst 52 per cent of men are saving adequately this year compared to 59 per cent in 2009.
- A fifth (21 per cent) of those that could and should be are not saving at all
- Women over 50 have been hit the hardest, the index has fallen dramatically from 52 per cent saving adequately in 2009 to 38 per cent in 2010
- 41 per cent of people have saved less because of the economic downturn
- Reliance on DB schemes has dropped - 70 per cent of those with a DB scheme believe it will provide their main income in retirement, compared to 78 per cent last year
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