People ‘are not saving enough for retirement’

Less than half (45 per cent) of those surveyed by Scottish Widows were found to be making adequate provision, marking a new low since research started in 2005.

A retirement savings gender gap is also on the increase, with 40 per cent of women putting enough by compared with 49 per cent of men.

The widened gap has come from a drop in the proportion of women who were preparing adequately, from 42 per cent last year.

One-fifth of men and women combined were saving nothing at all for their old age and more than a third were “under-saving”.

People were seen as preparing adequately if they were saving at least 12 per cent of their income or expecting their main retirement pot to come from a “gold plated” defined benefit (DB) pension which offers a guaranteed level of income such as a final salary pension.

Those saving less could still build a “worthwhile” income but they were likely to see their living standards drop sharply after retirement.

Someone retiring aged in their mid-60s faced receiving less than half the amount of money they would feel comfortable living on in their old age, the report found.

The typical level of income people felt they would need in retirement was £25,200.

But based on what pension savers were putting away, the report estimated they were more likely to end up living on around £11,400 a year, including their private and state pension.

Ian Naismith, a pensions expert at Scottish Widows, said: “People are now less prepared for retirement than at the height of the downturn a few years ago, yet expectations for income in retirement are still increasing.

“As a nation we must either prioritise saving for the future and prepare accordingly, or seriously adjust our outlook for old age.”