There has been a dramatic deterioration in the proportion of people saving for their retirement in the last twelve months, research from Scottish Widows reveals.
The life and pensions provider’s annual report into pensions saving reveals a 9% drop in the proportion of people investing in their retirement dropping back from 55% in 2005 to 46% this year.
And Scottish Widows says the proportion of people who say they do not know where their main retirement income will come from has more than doubled in the last twelve months to 23%.
The report claims the percentage of income being saved towards retirement from those people not expecting to receive their main retirement income from final salary schemes has also fallen from 7.9% last year to 5.8% now.
Scottish Widows says 2 in 5 people are saving nothing at all to their retirement, while 4 out of every 5 people are failing to save an adequate amount.
The research appears to prove the link between pensions savings and earnings stating those saving an adequate amount towards their pension typically earn £10,000 more at around £27,000, than those who save nothing at all typically earning around £17,000.
But there has also been a significant increase in the number of people saving nothing towards their retirement up from 17% in 2005 to 28% now.
Ian Naismith, head of pensions market development at Scottish Widows, says although it may be too early to tell it is possible people have put decisions about their pension savings on hold until the government completes its planned reforms of the sector.
He also argues there is a real lack of confidence in the ability of final salary schemes providing adequate retirement incomes.
“If people wait until the government’s reforms come into effect in 2012, it will be a case of too little too late. Everyone needs to get onto the savings ladder as soon as possible to start working towards a comfortable retirement,” Naismith adds.
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