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Pension savings remain inadequate

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Almost a half of people are not setting sufficient sums aside for their retirements.

The latest annual Scottish Widows UK pension report has found that just 51 per cent of those surveyed are making adequate provision for the time they stop working.

As an average, £24,300 was the figure given for retirement income that would enable a comfortable lifestyle at the age of 70 (down from the £27,900 cited before the recession hit).

While most respondents acknowledged the need to take responsibility for their own financial arrangements, some 49 per cent were failing to do so. In realistic terms, this would mean setting aside some 12 per cent annual earnings in a pension pot.

In fact, the average savings ratio, which gauges the percentage of income being saved for retirement by UK workers not expecting to get their main retirement income from a final salary pension, is just 9 per cent, a 3 per cent deficit.

Over 5,000 people were interviewed for the survey.

Scottish Widows noted that the figures showed what was described as “widespread and ingrained inertia” across the country, with savings levels holding steady over the past five years despite the economic downturn.

Although the default retirement age has been dropped, and there are plans to increase the age at which people qualify for the state retirement pension, the average point at which people would like to stop working is just over 61.

Ian Naismith of Scottish Widows said: “Much higher saving levels are needed to get towards the average £24,300 a year people aspire to. The message is that everyone should be putting aside as much as they can afford for their retirement.”