Are you looking forward to a comfortable retirement? Most people must surely agree that relying on the state pension to provide this comfort in the future is not too short of relying on the National Lottery!
Whilst auto-enrollment may help younger readers, at a cost, there is a current problem building up. Fewer than half of Britons are saving enough into a pension fund, while one in five people are not putting aside anything at all, a new report suggests. According to a study by Scottish Widows, just 45% of adults aged over 30 are saving enough for their twilight years, the lowest proportion ever recorded.
Researchers have found that the average retirement income that people would be happy with at age 70 is now £25,200. Future plans for the state pension means that a couple can expect a state pension of little more than half that amount. This shortfall, experts have warned, will mean that many people will be forced to delay their retirement until their seventies. The report claims that pension savers are being hit by a ‘triple whammy’ of economic uncertainty, an increase in the age of first-time home buyers and an ageing population.
‘These factors combined create a perfect storm for those heading towards retirement,’ said Ian Naismith of Scottish Widows. ‘Whilst we are becoming more aware of the need to save for retirement, we must do more to ensure that we have a comfortable old age.’
He continued; ‘Whilst starting saving as soon as possible is highly desirable, and increasing contributions as retirement approaches is almost essential, the biggest single difference can come from postponing retirement.’
Both employers and employees will be affected by this situation. The Governments answer is to force everyone into compulsory savings for pensions. Auto-enrollment will not only cost employers more in pension contributions but will also reduce employees take-home pay. Opt-out? We suggest that you should not rely on this. We would be surprised if plans have not already been scrap this.
We have a number of partners who can provide good advice on investments and savings. If you are an employer or an employee, and are concerned about what you have just read then please contact us and we would be happy to assist.