Almost half of people don't pay enough into pension

Almost half of people are on track for a disappointing retirement as they are failing to save enough into a pension, a report indicated today.

Around 49% of people are not setting aside enough for when they stop work, 20% of whom are failing to save anything at all, according to life insurer Scottish Widows.

The group said the number of people who were not saving enough for their retirement had remained consistently low for the past five years, during which time the proportion of people making inadequate provisions has ranged from 46% to 52%.

The study, which looked at people aged between 30 and state pension age who earned more than £10,000 a year, found that only 51% of people were paying enough into a pension each month to give them a comfortable retirement.

But the figure dropped to just 25% of workers, once people who were members of final salary pension schemes were excluded.

People who are not members of final salary pension schemes are saving an average of just 9% of their income into a pension each month, only three-quarters of the 12% of pay that Scottish Widows estimates people need to set aside in order to have a comfortable retirement.

Overall, the group estimated that people should save an extra £58 a month on average in order to have enough money during retirement.

The high level of people who are not saving enough comes despite the fact that 73% of those questioned said they recognised the need to take personal responsibility for ensuring they had sufficient income to live off when they gave up work.

Ian Naismith, head of pensions market development at Scottish Widows, said: "This year's report clearly illustrates the stark difficulty we face in helping people to recognise the urgent need to take personal responsibility for their future.

"We need a step-change to overcome this ingrained inertia and help people prepare for their retirement."

The average age at which people would like to retire remained unchanged from 2010 at 61 years and eight months.

Only one in five people said they would be happy to work until they were 70, with people typically saying they would want to retire at 66 and six months at the latest.

People would like to have an average annual retirement income of £24,300, a significant drop from the £27,900 they hoped to have in 2009.

In a bid to encourage people to save more the Government is introducing auto-enrolment from October 2012.

But 11% of people said they would opt out of a scheme if they were automatically enrolled into it, and the average person said they would only be prepared to pay in £37.50 a month, which for the majority of workers is likely to be significantly below the 4% of their pay that they will have to contribute.

A Department for Work and Pensions spokeswoman said: "We know that people aren't saving enough for retirement and this is exactly why we will automatically enrol people into a workplace pension from 2012.

"We welcome the findings of this report that show that the majority of people will stay enrolled in their pension as it will be a welcome boost for those who are struggling to save on their own.

"Automatic enrolment will get 5 million to 8 million people saving for the first time or saving more for their retirement with contributions from their employer."

:: YouGov questioned 5,200 people during March.

Independent Partners: 10 top tips for retirement. Get your free guide here

News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Sport
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
PROMOTED VIDEO
Sport
Gabriel Agbonlahor, Alexis Sanchez, Alan Pardew and Graziano Pelle
footballAfter QPR draw, follow Villa vs Arsenal, Newcastle vs Hull and Swansea vs Southampton
News
news
New Articles
i100
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
New Articles
i100... with this review
Voices
Holly's review of Peterborough's Pizza Express quickly went viral on social media
New Articles
i100
Arts and Entertainment
musicHow female vocalists are now writing their own hits
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam