Fear drives pension savings, but half not preparing

Half of Brits are failing to save for their retirement, new data reveal.

The Scottish Widows Pensions Report shows 51 per cent of the UK is saving for retirement – a rise of two percentage points in the last year.

However, those saving have increased how much they are putting aside – with 37 per cent of people admitting to be scared about having nothing in retirement.

The research also found the savings gender gap is closing, but women are still more likely to save for the short term.

A general rise in savings was also attributed to short-term plans and fears stemming from the credit crunch while price rises mean finances are stretched and long-term saving goals are going out the window.

Ian Naismith, head of pensions market development at Scottish Widows, said: "While pensions savings are slowly starting to rise, there is still the real worry that in the current economic environment the nation is not doing enough to prepare for retirement.

"While the savings message that we have been campaigning on for several years is getting through, with people scared that they will not have enough to live on in retirement, this hasn't necessarily translated into pensions savings.

He added: "Traditionally in times of economic uncertainty, long terms savings have increased but people need to ensure that they are saving into the right vehicle; the best investments for those seeking security in retirement are pensions."

Commenting on the findings, Mervyn Kohler, special adviser for Help the Aged, said: "It's very worrying that so many adults aren't saving adequately for their retirement.

"With more and more pensioners living in poverty and more older people apparently working longer to avoid getting into financial difficulties, people need to be doing all they can to save for retirement."

He added: "Living on a fixed income when the cost of essential household items is soaring so much is incredibly difficult for pensioners."

The Scottish Widows research showed 18 per cent of people are not savings at all, while 14 per cent are serious under-saving by just putting aside between zero and six per cent of their income.

Non-savers are more likely to be women, a parent with a child under five, self-employed or in debt.

Meanwhile it is men, those working in the public sector, high earners and those heading into retirement shortly who are most likely to save.