Recession put pension savings under pressure
Pension saving has been hit hard by the economic downturn, a new study has suggested.
The latest Scottish Widows Pension Index, which tracks savings levels, found that the proportion of people who are setting aside adequate amounts for their retirement fell from 54 per cent in 2009 to 48 per cent in 2010.
Both men and women have been adding less to their pension pots this year, but the position is worse for women.
According to the survey, some 52 per cent of men have been saving adequately this (compared with 59 per cent in 2009), but just 43 per cent of women setting aside sufficient funds this year (down from 47 per cent last year).
Four out of ten people who took part in the poll blamed the economic downturn for the drop in savings.
Retirement savings had been on the rise in the three years prior to 2009, but that trend seems to have been reversed.
The group that has experienced the most significant decline in savings is the over-50s. Only a half are saving enough to fund their retirements.
The percentage of women over 50 not saving at all for their retirement increased from 22 per cent last year to 26 per cent this year.
Ian Naismith, head of pensions market development at Scottish Widows, said: “It is a worrying sign that the group most vulnerable when it comes to retirement savings is women over 50. While women’s career patterns often make it hard to save consistently for retirement, this is the time when they should be saving the most.”
Rather than deterring people from saving, Mr Naismith argued that the economic downturn should have been the trigger to save more: “For those who are able to put more aside for their retirement, we recommend they save 12 per cent of their income to ensure that they have a comfortable retirement.”
He added: “The whole nation is feeling worse off than a year ago and this is really starting to take its toll on pensions savings. While there are signs that the economy is recovering, the nation’s saving habits paint a very different story.
“There is still a great deal that needs to be done from both the government and the industry to better encourage pensions savings for the long-term.”
The survey revealed that while a quarter of people with a pension, who are not yet retired, want to save more for retirement, almost a third (29 per cent) reported that they can’t save more than they are currently doing so.