Women over 50 need to re-engage with pensions savings

As women over 50 have been hit hardest by the dip in pensions savings, Scottish Widows is calling on this group to re-engage with pensions savings to ensure they prepare adequately for retirement.  At an event today to mark the launch of the sixth annual Scottish Widows Pensions Report and discuss the issue of "Pensions in a new Parliament", Scottish Widows highlighted its core recommendations to tackle the nations pensions savings.

Scottish Widows Pensions Report reveals that there has been a dramatic drop in pensions savings since last year and it is in fact at the lowest level since 2006. The Scottish Widows Pensions Index, which tracks the percentage saving adequately for retirement, has decreased from 54% in 2009 to 48% in 2010 and a fifth (21%) of people who could and should are saving nothing at all.

The Scottish Widows Average Savings Ratio, which tracks the percentage of income being saved for retirement by UK workers not expecting to get their main retirement income from a defined-benefit scheme is currently 9.2% (a drop of 1% from last year).  This falls almost 3% short of the 12% that Scottish Widows believe people should be saving to achieve a comfortable retirement.

Steve Webb MP, Minister for Pensions, commented at the event on the Government's pensions proposals and reviews to date, in addition he said: "It is important to note that life expectancy continues to go up. We need to get the public thinking about 20 years of retirement, and not about the 5 years of retirement their grandparents might have experienced, it's particularly important that younger people understand this.

"As a Government we need to think big on pensions policy, we need to raise our eyes to the horizon or we will never get the starting point right for pensions savings. The starting point is getting the state pension right and then people can make clear choices about their own provisions for the future."

Panellists at the event also included Andrew Harrop, Policy Director at Age UK and Lucy Parsons, senior economics researcher at Reform who shared their expert opinions on the current retirement landscape we face.

Ian Naismith, Head of Pensions Market Development, Scottish Widows sets out his recommendations to help pensions saving shortfalls: "It is clear from our research that there is a section of the population, largely made up of women over 50, who have become disengaged from pensions and savings.  They are disillusioned and are resigned to working right through their 60s and facing a large reduction in income when they retire.  We must do everything we can to encourage them to re-engage with saving, and they must have confidence that any modest savings they can make won't simply result in a reduction to means-tested benefits.

"There is another group, largely made up of younger women, who have no interest in providing for their future.  For them, the introduction of automatic enrolment could kick-start their savings, and we believe it is essential that the current review does not result in a delay in introducing pensions reform.

"Finally, we believe that removing tax incentives for high earners is likely to reduce employer commitment to pensions.  We welcome the current review of the changes to pensions taxation proposed for April 2011.  We recognise that any alternative will have to provide the same savings in tax relief, but it is very important that there is no further erosion of pension tax incentives."