Pensions: 20% of us are failing to save for our retirement

7th June 2011

The seventh annual Scottish Widows UK Pensions Report 2011 reveals what it claims is "widespread and ingrained inertia" with nearly half (49 percent) of those people who could and should be saving preparing inadequately for retirement.

Levels of saving remain broadly consistent over five years, pre and post the financial crunch, with those preparing inadequately never falling below 46 percent or rising above 52 percent.

The Scottish Widows Pensions Index – looking at those between 30 years-old and state pension age who earn more than £10,000 per year – shows that only 51 per cent of the current generation of potential savers are making sufficient provisions for their retirement.

This drops to around 25 percent when those with a final salary pension are excluded. A fifth (20 percent) of people are failing to save anything at all.

This comes despite the fact three quarters (73 percent) of people recognise the need to take personal responsibility for their retirement planning, demonstrating that awareness in the importance of saving is not translating into action.

The Scottish Widows Average Savings Ratio – which tracks the percentage of income being saved for retirement by UK workers not expecting to get their main retirement income from a final salary pension – remains at just over 9%.

This is a 3% shortfall from the 12 per cent Scottish Widows believe people should be saving to achieve a comfortable retirement.

Ian Naismith, head of pensions development said:  "This year's report clearly illustrates the stark difficulty we face in helping people to recognise the urgent need to take personal responsibility for their future. We need a step-change to overcome this ingrained inertia and help people prepare for their retirement."

The BBC News website reported that pension savings in the UK are at a lower level than in France, Germany and Spain.

City AM reports that "one in five workers are not saving anything at all towards their retirement".

People want £24,300 a year in their retirement, on average, in order to live comfortably, and aim to retire just short of their 62nd birthdays.

While many respondents say they could save an extra £100 a month, few are turning their words into action, the survey shows.

With an extra £58 per month, savers could make up their savings shortfalls, Scottish Widows claimed.

“That is roughly the cost of a cup of coffee every day,” added Naismith.

Nearly one in ten (nine per cent) of respondents said they will opt out of the National Employment Savings Trust (NEST), if automatically enrolled.

More information:

For the Government point of view, here is Mindful Money's report of a recent speech by the pension minister Steve Webb.

Here is a link to the Nest website.

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10 thoughts on “Pensions: 20% of us are failing to save for our retirement”

  1. Italy’s Ten Year went from 6.76% yesterday to 7.47% today– 700pips. I think Bernanke would step in only as a last resort to save the Euro currency itself because of the sh!tstorm he’d catch back here for doing this. It would likely cost him his job, especially if a Repub wins the election. 

    It seems to me that only when Italy has a failed bond auction will Il Duce begin to understand things are bad enough to change. Unfortunately for him and his country, by that time it’s far too late. In the meantime, Berlusconi will continue to play political games to save his hide instead of applying the painful medicine needed. 

    1. Bkester says:

      Walt Kowalski, I agree with your remarks about Bernanke.  But, back to the wall, I think he’ll intervene anyway especially seeing that there can’t be a Republican President in office before January 2013 – an eternity away in politics.  However, if Shaun is still looking for Spartacus, I’d say the closest thing we have right now is the money-printing supervisor in Frankfurt patiently waiting for Berlin to cave in and deliver truckloads of paper and ink. Gold anybody?

  2. Anonymous says:

    Shaun re Chinese inflation. I seem to remember some while ago that either you or one of the commentators suggested that many of the numbers coming out of China have been “massaged”; how much faith can we place on those quoted? If today’s are valid, can we assume a “soft landing”?

    1. Drf says:

      Hi Ray_Fletcher, are Chinese numbers likely to be massaged any more than those of the UK?  Indeed are they likely to be massaged as much as the UK’s or US’s? Are any officially published numbers “valid” any longer, or as with the currency wars are they all racing to the bottom of credulity?

      1. Anonymous says:

        Drf – having read your response I must plead a large dose of naivete. You are, of course, absolutely right in what you say.

  3. Robert Silver says:


    As ever, thank you for an excellent blog.

    I know this is off topic, but as a non-economist, it’s rare that I read in the mainstream press how much the ECB has actually purchased over the last few years.  So I read with interest yesterday, in The Telegraph, that the ECB has bought, “The stated level of ECB intervention is €587bn for eurozone banks and €184bn in bond purchases.”.  Quite a large number and in fact over half of the €1 trillion that the EU wanted to raise!  Link to article:

    Finally, did you hear on Monday that the U.K. Treasury Select Committee wanted to curb some of the BoE powers?  Perhaps they’ve been reading your blog!


  4. JW says:

    Sparticus is female…Angie. Or failing that it has to be Ben.

  5. AlexWild says:

    Walt Kowalski, Bkesteri’m a lay man with my own amateur economist view that is Bernanke has no interest in saving the Euro.As all the currency’s race to the bottom, Bernanke wants the dollar to be on the top of the flat pile bolstering the dollar’s status as ‘the reserve currency of the world’ although it maybe worthless, its still the most valued of the pile..there are rumours that Gadafi sought a gold backed Dinar libyan currency and was interested in dealing with the chinese in a currency other than dollars for oil due to currency wars/ devalued dollar. This is muted by the ‘alternative media’ as the background reason why he needed to be removed. Mr Hussain of Iraq had also tried to do something along these lines prior to being wrapped up with 9/11 events even though Mr Bush stated publicly Iraq had nothing to do with 9/11. They invaded on the pretext of 9/11 attacks anyway.Presuming that if the Dollar, backed by nothing, was to loose its reserve status, America would be Zimbabwe.Bernanke sings in the bath ‘burn by babe burn, disco inferno’ in the context of the Euro.Anyway interesting times ahead.

    1. Anonymous says:

      Hi Alex

      My suggestion that the US Federal Reserve might ride to the rescue was not because I thought it would be altruistic but more because if the European banking system was to freeze up much more it would be indirectly protecting US banks by acting.

      Whilst it seems an outlier as a possibility it seems that whilst there is still some doubt over whether the European banking system is freezing up, there is much less doubt that its leaders will continue to fiddle while Rome burns (hopefully not literally).

      Also a side effect of all this today was a much stronger US dollar which is the reverse of one of Ben Bernanke’s (unstated) objectives.

  6. Anonymous says:

    Hi Robert and thanks for the compliment
    The actual levels of purchases that the ECB has made has been some 183 billion euros of peripheral government debt and 60 billion Euros of Covered Bonds. Both amounts are rising as it faces a daily battle in the Italian bond market where today it lost again and it plans to buy another 40 billion Euros of covered bonds.
    I have checked its money market operations and the various refinance operations come to 590 billion Euros. These should be less risk than the 2 programmes above but that is less risk and not no risk.
    We thereby get to my point that the ECB’s balance sheet is in a shocking state.
    Unfortunately the TSC are heading in another direction and seem to want to turn the Bank of England into a highly paid but ineffective Quango! I know that my idea has been sent to a Treasury Minister but if he takes as long to reply as my MP Jane Ellison took to pass it on (13 months) it may yet be a long wait!

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