Just One Third Saving for Retirement

Only a third of us are putting money away for our retirements, a new ONS report reveals – so act now if you’re not presently paying into a pension scheme.

Most of us have felt the financial pinch over recent years, and we’ve economised accordingly.

But worryingly, one of the most vulnerable aspects of our personal finances has turned out to be our pensions.

According to a new report by the Office of National Statistics, just 39% of men and 28% of women are saving for their retirement by paying into a private pension scheme. This is down from 52% of men and 41% of women in 2002.

The fall is attributed to the large numbers of firms who have scrapped their final-salary schemes, along with stock market falls that have dramatically devalued pension funds. Low interest rates have also meant pension savings are yielding less and less.

Public and private sector pensions

Employees in the private sector are also much less likely to have pensions that those in the public sector.

Over the same period, the number of public sector workers with pensions actually remained stable – women employed by the Government are three times more likely to have a pension, while men are twice as likely to be putting money away for their retirement than their peers in the private sector.

Dr Ros Altmann, a pensions expert who is Director General of Saga, struck a gloomy note about the latest statistics: “We’ve been suffering a pensions crisis since 1997, now we are facing a catastrophe.”

The Government is hoping to nudge more of us into saving by introducing auto-enrolment pension schemes for employees in 2012. It hopes that this will have a big impact on the savings prospects of the five to eight million Brits who are no longer paying into a pension scheme or have never done so.

Ministers are also hoping to balance the increasing demands placed on pension funds by raising the state pension age for men and women to 66 by 2020 – causing inevitable friction among public sector employees.

Moneyhighstreet comments: “Saving for pensions has got much harder in recent years – partly due to the recession, partly due to the closure of final salary schemes and partly due to less generous pension tax reliefs. Worse, growing numbers of people are retiring with debts.

“However, it’s vital to put away money for your retirement, particularly if you don’t have a high income or other investments. So if you don’t presently have a pension scheme, start one now and set yourself a realistic savings goal. Making other savings on household expenditure, such as seeking out cheaper energy deals, along with consolidating your loans could help set aside the right amount of money.”