Scots’ retirement savings levels in decline, says Widows

Widow’s 13th annual Retirement Report shows the drop in adequate savings is due to 25 per cent of Scots now saving nothing, an increase on 19 per cent last year.

Younger people in particular are struggling, with 70 per cent of 22-29 year olds failing to put enough away for life after work.

Over half (51 per cent) of Scots in their 30s are failing to save adequately and 38 per cent are saving nothing.

In contrast, 72 per cent of 50-59 year olds are putting away an adequate amount, with just 18 per cent saving nothing.

Three quarters (75 per cent) of Scots are paying something into a pension.

One in three (33 per cent) said this was due to auto-enrolment, where employees contribute a minimum of 1 per cent of their salary into a pension pot, matched by a 1 per cent contribution from their employer.

However, Scottish Widows warns that this is significantly below what is required for a comfortable retirement, suggesting a combined 12 per cent employer and employee contribution as an adequate level of saving.

From April next year, minimum employee and employer contributions will automatically increase to 3 per cent and 2 per cent respectively.

The research suggests that more people could begin to opt out of pension schemes as these contribution increases are introduced, with only 54 per cent of Scots committing to staying enrolled.

Twenty-nine per cent of Scots said they can’t afford to save any more into a workplace pension than they do now, an increase of six percentage points in the last year. Average debt levels in the country have risen by more than £2,000 in the last 12 months to more than £10,800. Three in ten (29 per cent) have credit card bills to pay and 12% have student loans eating into their pay cheques. A further 11% have additional loans to pay off.

Catherine Stewart, retirement planning expert at Scottish Widows, said: “The drop in adequate savers in Scotland over the last 12 months is a real concern and it is especially concerning to see how much the younger generation is struggling to put enough away for later years.

“To really help the younger generation start to think seriously about retirement savings, the essential first step is to understand what information they need. If we don’t get this right then it is far more difficult for them to reach their desired savings levels in their 30s and 40s.

“What we know for sure is that younger people are far more likely to engage with technology and information that can be easily digested. We have therefore created a series of Pension Basics films available on our YouTube channel and are currently developing a smart phone app allowing members of corporate pension schemes to keep track of how their savings are growing. Continued investment in digital innovation will therefore remain a key priority for Scottish Widows.”