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Saving for a pension - the new inequality?

Journalist: Samantha Downes, Freelance and Pumpkin Pensions

ended 29. June 2023

Today Scottish Widows announced the launch of the National Retirement Forecast which will (NRF) provides forensic analysis of the challenges faced by different demographics.

I'm after comment from those who are involved or advise pension funds and clients. What can be done and what part can those who run pension schemes play. Is it just ‘education’.

 

 

 ●35% of Brits may struggle to afford food and heating in retirement due to the current economic climate●NRF indicates significant polarisation with 36% heading for a comfortable retirement compared to the 35% projected to struggleOne in three (35%) Brits could be facing poverty in retirement according to Scottish Widows’ 19th annual Retirement Reportpublished today (28 June). The report’s new National Retirement Forecast (NRF) establishes the clearest picture ever captured of the UK’s future retirement landscape, using the Pension and Lifetime Savings Association (PLSA)’s‘Retirement Living Standards’ levels to calculate the quality of lifestyle that people are set to achieve when they stop working. The NRF compares the retirement lifestyles within reach for different ages, ethnicities, genders and employment statuses, as well as zeroing in on underrepresented groups such as disabled people and the LGBTQ+ community. In forecasting savers’ anticipated lifestyles, the NRF recognises that factors other than pensions play a role in the income people will rely on in retirement and also accounts for housing costs.By surveying societal segments in large numbers, Scottish Widows has pioneered the most inclusive picture of UK savings to date. Finding that many societal groups –such as renters and young people –are disproportionately facing hardship, while others such as millennials are saving well for retirement:●Almost half (43%) of the people predicted to struggle in retirement expect to be still paying rent.●Rental costs amount to 60-70% of renters’ retirement income in several parts of the country, but this figure to 130% in London.●Almost half (41%) of people currently in their 20s are heading for hardship in retirement, with an average retirement income of £10K among this group.●43% of Millennials are on track for a comfortable lifestyle, reflecting strong savings behaviours and the benefits of automatic enrolment.●On average, women will receive a third less income in retirement than men (£19K vs £12K).●Half (49%) of Brits have not checked whether they are entitled to the full state pension.

 


 

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Editor
Scott Gallacher
Director at Rowley Turton
The current cost of living crisis is casting a long shadow over future retirements, with the most affected individuals facing dire consequences. As people grapple with the impossible choice between "heat" or "eat," they now also contend with rising rents and mortgage payments due to recent bank base rate hikes. In this climate, it's no surprise that pension contributions take a backseat. However, this neglect may unwittingly trap individuals in retirement poverty or render them unable to retire altogether. Immediate government intervention is crucial to spare people a lifetime of toil and secure their financial well-being in old age.