Pension saving succumbs to the downturn

The proportion of people saving adequately for retirement has sunk to its lowest since 2006 as the full impact of the downturn on people’s pension provision becomes evident, a report finds.

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by Chris Marshall on Jun 29, 2010 at 08:45

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The proportion of people saving adequately for retirement has sunk to its lowest since 2006 as the full impact of the downturn on people’s pension provision becomes evident.

Saving for retirement has been rising in recent years, but since last year there has been a ‘dramatic drop’, according to Scottish Widows.

Ian Naismith, head of pensions market development at the insurer, said that while there are signs that the economy is recovering, people’s saving habits paint a very different story.

‘The whole nation is feeling worse off than a year ago and this is really starting to take its toll on pensions savings, but instead of putting people off saving, the economic downturn should have been the trigger that everyone needed to save more,’ Naismith said.

The report found three categories of people that are more likely to be ‘saving adequately’ for retirement: men, those working in the public sector and high earners.

Conversely, those who are more likely to be non-savers include women, parents with three children or more and the self-employed.

Women over 50 have been hit hardest, according to the report. Only half of this group has been saving adequately. ‘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’, Naismith said.

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3 comments so far. Why not have your say?

Those in the public sector are saving adequately for retirment because their savings are being unfairly and over-generously funded by the tax payer, into their gold plated final salary schemes. This has to stop NOW.

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The govt is generous with the 'employers' contribution. They do not have to pay it into a separate fund, they take it (pensions) from the general tax revenue as it arises.

Better they pay it together with the employees contribution to a separate fund.

It will hurt the taxpayer for some years, the more civil servants the higher the bill, but their pensions can only then be what the fund can stand, and the govt will swiftly abandon inflation proof gold plated pensions.

MPs should also pay in, and if they want inflation proof, then a very much bigger slice of their pay will have to go into the fund. Currently the taxpayers add £20k + towards the full pension they earn in 15 years. So MPs pay is not £63k, but over £84k, if if inflation proof, more like £90-95k pa. I am guessing, an actuary is needed.

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Anonymous 2 needed this 'off the record'

Jun 29, 2010 at 22:00

The alarming disparity between public sector pensions and the private sector can only be addressed in the long term by a courageous effort by the present government to end public sector pensions in their present mainly unfunded form, and to ensure that everyone pays into the same type of pension fund which is invested in real assets. That means an end to free state funded pensions paid for out of current taxes not investments like the rest of us. If you don't like it then get a job in the private sector. But you won't because you know it's far tougher.

This medicine will hurt but it is better to take the pain now than in 10 years.

It cannot be in the long term interests of a fairer society that this unfairness should be allowed to continue for any longer. I speak as someone who has only a motley selection of private pensions that sink or swim on the tide of real market performance. I am not the only one who will have to soldier on well into their 60s at this rate even if markets start to make up for the lost decade of the noughties in terms of performance.

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