Middle-waged to get burned in retirement
People earning £30,000-£50,000 could be hit hard by a pensions gap
Pensions minister Steve Webb warned this week that up to 12 million people will face a shortfall in their pensions despite the introduction of automatic enrolment. Crucially, he pointed out that middle-income workers are just as likely to be hit as low-paid ones.
"Under-saving is far from being the exclusive preserve of low earners," Mr Webb said. "Many on middle and higher incomes clearly need to do much more to ensure that they get the retirement that they want."
Exclusive research handed to The Independent backs up his concerns. It reveals that one in 10 middle-income workers, defined as earning between £30,000-£50,000, has no pension at all while one in five is currently not making any pension savings.
The figures are being published as part of the Scottish Widows Workplace Pensions Report. It reveals the full scale of the problems facing the squeezed middle-waged. Frighteningly, a third of those with no pension are being forced to prioritise paying off debts rather than save for their retirement. A second third is prioritising mortgage payments while the remaining third say they simply need their cash to cover living expenses.
And the research shows that even among those who are saving into a pension, the middle-waged actually face a larger-than-average income shortfall in retirement. The shortfall is based on people's expectations of how much income they think they will need in retirement compared with how much they are actually saving. Across all income bands the average monthly pension shortfall stands at £669: for the middle-waged it is £740.
In fact the pension gap between what all British workers are prepared to save and what they need to is widening. In the past year the amount employees are prepared to stash in their retirement savings pot has shrunk by almost a quarter. The Government's auto-enrolment programme is designed to help reduce the pension gap facing millions in the future.
But the research revealed significant gaps in people's knowledge about how much they are paying into a pension – even among the one million who have already been auto-enrolled into their workplace scheme. More than a quarter have no idea how much they put in while almost half don't know how much their employer adds.
Lynn Graves, corporate pensions chief at Scottish Widows, warned: "We cannot ignore the correlation between poor employee awareness of the scheme and the lack of understanding of the realities of retirement."
Tom McPhail, pensions expert at Hargreaves Lansdown, said: "The research highlights that we're still a long way from mission accomplished when it comes to pensions. Most employees aren't saving enough, yet the amounts they are willing to save are falling. This highlights the vital role that employers, advisers and pension companies have to perform in helping employees to plan effectively for retirement."
- 1 Jeremy Clarkson 'sees no problem' with his racist language on Top Gear, says BBC
- 2 'Alien thigh bone' on Mars: Excitement from alien hunters at 'evidence' of extraterrestrial life
- 3 Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
- 4 London restaurant 34 creates champagne glass modelled on Kate Moss’ left breast
- 5 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Bin bag full of cats' heads discovered near Manchester's Curry Mile
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
iJobs Money & Business
£30000 - £40000 per annum + benefits+bonus+package: Harrington Starr: C#.NET ...
£20000 - £30000 per annum + benefits+bonus+package: Harrington Starr: Junior D...
£550 - £650 per day: Orgtel: Business Analyst - Traded Credit Risk - Investmen...
£55000 per annum: Harrington Starr: A financial software vendor at the forefro...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony