Don’t cheer yet over pensions

 

Simon Read
Wednesday 11 June 2014 03:50 EDT
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Savings levels are at a five-year high, according to the annual UK Pension Report from Scottish Widows, which is published today.

In fact, more than half of the population are now saving adequately for retirement, the report says. That’s one of the highest levels in the history of the yearly survey and the biggest ever year-on-year rise.

Meanwhile, the monthly amount people are saving towards retirement outside a pension – in an Isa, for instance – has increased by 141 per cent, from £54 in 2006 to £130 in 2014.

Is that reason to cheer? Not really. Deeper analysis of the statistics shows that there are key groups of people who still remain woefully unprepared for the financial reality of retirement.

First are the self-employed with only 33 per cent in the right financial position. Then come divorced women, with only 36 per cent of them prepared.

With the former it’s presumably because many are focused on investing in their growing business and leaving their future to take care of itself, maybe with the eventual proceeds of their business.

With millions of workers being introduced to the financial benefits of retirement saving plans through the government’s auto-enrolment scheme, the self-employed have missed out.

And if most of them don’t act soon, they could miss out on being able to build up a decent pension pot by the time they retire.

Meanwhile, the number of divorced women who have adequate pension provision is low because many have simply relied on their partner’s pension arrangements and done nothing about sorting out their own plans since they’ve separated.

Scottish Widows’ pension expert Ian Naismith warns: “There are some groups who are not preparing adequately for a comfortable later life and are at risk of slipping through the net.”

Preparing for the future is important, if only to make sure it’s as comfortable as you’d like it to be.

s.read@independent.co.uk

Twitter: @simonnread

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