According to a new report people aged between 30 and 50 are falling behind in saving for retirement.
A survey by pension provider Scottish Widows found that 59% of those over 50 were making provision for their retirement, whereas only 47% of those between 30 and 50 were doing so.
Even more worryingly around 20% of the 5,200 people surveyed are making no provision whatsoever for their retirement. Nearly half were making some provision for their retirement but not putting away an adequate amount into a pension.
Despite the relatively low level of saving for retirement the survey found that the average person would like a pension of £24,300 a year from the age of 70. To get such an income experts warn that a substantial pension fund of at least £500,000 is likely to be needed.
The tough economic times in which we live when wage rises are lagging behind inflation may be partly to blame for the lack of retirement savings, this was echoed by Ian Naismith of Scottish Widows who produced the report “We appreciate the difficulty in setting aside extra money. The message is that everyone should be putting aside as much as they can afford for their retirement.”
The government are making various changes to the pension system in an effort to engage savers into making provision for their retirement.
A flat rate State Pension has been proposed and from October 2012 a new workplace pension will be phased in. This will mean all employees who earn above a certain level, approximately £7,500, will be automatically enrolled into the new workplace scheme, employers will also have to contribute.
The report from Scottish Widows suggested that support for the new workplace pensions was “reasonably strong”, however the amount that people were prepared to pay in was insufficient to meet their retirement objectives.
“The successful implementation of automatic enrolment, combined with state pension reform, could help galvanise consumers into action to think more about how much they are saving and when they start to make provisions,” said Mr Naismith.
“However, these measures need to be accompanied by a clear message that most people need to see these as the foundation for their retirement savings rather than the full solution.”