Money News
In a new report, Scottish Widows reveals that while confidence is beginning to return to the pensions market (with savings figures up from 2006), only 49% are saving adequately and 24% aren't saving at all. Meanwhile, 32% of those who have at least one pension are unsure where their main source of income is coming from.
The Scottish Widows UK Pensions Report, first launched in 2005, uses two key measures to monitor pensions savings behaviour in the UK: the Scottish Widows Pensions Index and the Scottish Widows Average Savings Ratio. While these have risen in the last year, savings levels have still not reached the figures seen in 2005.
The Index and Ratio are based on those who could and should be preparing financially for retirement - those aged over 30 and earning at least £10,000 a year.
The Scottish Widows Pension Index, which tracks the percentage saving adequately for retirement, has risen from 46% in 2006 to 49% in 2007. And the Scottish Widows Average Saving 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, has risen from 5.8% to 7.9% - back to the level seen in 2005. Although the ratio figure has risen, it still falls significantly short of Scottish Widows' recommended target savings ratio of 12% of earnings.
The report reveals that someone saving adequately for retirement is likely to be:
1- Male. Almost two thirds of the adequate savers (67%) are men.
2- Working in the public sector. Public sector workers make up almost half of all those that are saving adequately despite being only a third of the workforce.
3- Older. 53% of those over 50 are saving adequately, compared to 44% of those between 30 and 50.
4- A higher earner. Of those earning over £30,000, 59% are saving adequately, compared to 44% of those earning between £10,000 and £30,000. Which of course leaves a lot of people out!
Confidence meanwhile continues to fall. Although more people are saving adequately than 2006, almost a third of savers (32%) don't know what their main source of income will be in retirement. This is matched by a continued fall in people that believe a final-salary scheme (defined-benefit) will provide them with most of their income.
22 June 2007 © Moneyextra.com
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