UK report points to falling retirement savings across age groups

A report published by Scottish Widows plc, an Edinburgh-based, life, pensions and investment company and a subsidiary of Lloyds Banking Group said, UK pension savers were putting less aside to fund their retirement needs than ever before, and less than half said they were saving enough to meet their income expectations.

According to the report, only 46 per cent of savers said they were putting enough for retirement, which was 5 per cent down on last year, 8 per cent down on 2009 and the lowest proportion recorded in the 8 years the report had been compiled.

The drop in savings spanned all surveyed age groups, and of the 5,200 UK adults surveyed, 22 per cent had put nothing aside for later life.

By way of contrast, people's expectations for earnings in retirement had increased from wanting an average of £24,300 in 2011 to £24,500 this year. Such low savings figures pointed to the average saver who retired at 65 receiving just over half the amount they felt they needed.

The total amount an average saver put away was around £150,000 in today's terms, which would only suffice to yield an annual pension of £5,700. On additions from the state pension this would generate a yearly income of around £13,000, which fell drastically short of the £24,500 annual income people were looking for and equated to a total shortfall of £300,000.

To meet current expectations, the report posited an average saver needing additional savings of £4,500 a year or £375 per month to plug this expectation gap.