LONDON (Reuters) - Pension income expectations have dropped in the past two years and just over half of the people in Britain are saving enough to fulfil their pension targets, a study by Scottish Widows showed.
A “widespread and ingrained inertia” is preventing many people putting aside enough to reach an average pension pot generating what they deemed sufficient at retirement — 23,400 pounds a year — the report said.
Only two years ago, the expectations of the pension pot stood at 27,900 pounds. But respondents still want to retire at around 62 years old.
“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,” said Ian Naismith, head of pensions market development for Scottish Widows.
The findings echo a previous study by HSBC (HSBA.L)..
Respondents said they could afford to put aside an additional 97 pounds per month on average for the long-term — compared with the 58 pounds Scottish Widows estimated necessary to prepare adequately for retirement — but were failing to do so.
The study found 51 percent of 5,200 respondents were making enough provision for their retirement, up from 48 percent in 2010.
The rate of adequate pension savers drops to around 25 percent when those with a defined benefit pension were excluded, while 20 percent of people were failing to save anything at all, the report said.
The ‘consistently low’ retirement savings clashes with a relatively high rate of awareness about the need for saving; three quarters of respondents said they recognised the need to take personal responsibility for pensions.
The National Employment Savings Trust (NEST), the pension fund to be launched next year to cater for low to middle earners with no pensions, could emerge as a solution.
Only 11 percent of respondents said they will opt out of NEST, while 21 percent said they remained undecided. The average amount that respondents would be prepared to pay in NEST accounts was 35.40 pounds a month.
Editing by Dan Lalor