Pensions savings have hit a record low as hard-up workers prioritise other payments above saving for their retirement.
The latest Scottish Widows pension report published today shows that only 46 per cent of people are now saving enough for retirement – five percentage points down on last year and a fall of eight percentage points from 2009.
Worryingly, more than one in five people – 22 per cent – have put nothing aside for later life. The drop in pension provision is widespread across age groups and income levels.
Yet aspirations for pension income have actually increased by £200 over the past 12 months. Based on this year's new low average savings level, a saver retiring at 65 would receive just over half the amount that they feel they need.
Ian Naismith, head of pensions market development at Scottish Widows, said: "These are alarming findings as UK pension provision has hit an all-time low."
Tom McPhail, head of pensions research at Hargreaves Lansdown said workers must heed the warning in the report and start saving.
"The key message is that it pays to save and that any delay just makes the hill steeper to climb," he warned. "Every pound of weekly saving a 30-year-old makes today will deliver around £3 of income in retirement. However a delay of just five years in starting to save would reduce that retirement income from £3 a week to £2 a week."
Mr Naismith said the new workplace pension scheme known as auto-enrolment could help reverse the trend when it's introduced later this year. "But we need a compelling government communications campaign to make clear the need to save for retirement."
The report revealed that there are "clear weak spots" across the country when it comes to planning for retirement. In the north-east where few employees are in a defined benefit pension scheme, less than a third are making the necessary provisions.
In the south-west, where there is a high proportion of self-employed people, 38 per cent are saving enough.Reuse content