Saving for pensions suffers as short term fears kick in

The MoneyMood Survey from Legal & General reveals a worrying shift away from longer-term saving, such as saving for a pension, as short-term needs outweigh the need for retirement planning.

Continued turmoil for the economy and increasing fears of job losses appears to be encouraging the majority of people to save rather than spend.  The latest MoneyMood Survey shows the mood of the nation is definitely one of saving (60 per cent) rather than spending (23 per cent) but short term saving needs are ahead of long term saving.

There are increases in the percentage of people who say they're saving "to pay household bills", "for home improvements" and "in case I lose my job". However, the percentage of people who say they are saving for a pension has fallen in the last six months.

Mark Gregory, Legal & General Executive Director Savings comments; "It's disturbing that amongst those who are saving, the number who say they're saving for a pension has fallen back to one in four (27 per cent) from its high in February of one in three (32 per cent). Only in London has providing for retirement shown an increase rising to one in two (50 per cent) of those who say they're saving. For most of the country this drop could have serious consequences in the decades ahead as putting off saving now could reduce retirement provision as savers money has less time to enjoy investment growth. We would urge people not to neglect their long-term needs in retirement just because of today's immediate concerns."

Mark added: "Delaying saving for a pension can increase level of saving needed in future. Our figures show that to achieve a pension income at age 65 of £20,000 a year starting today at age 30, requires monthly premiums of £234. However, delaying paying into a pension until age 40 means that monthly payments have to double to £470.  Adding up the contributions payable over the working lifetime an extra investment of £42,720 would be required for the late starter to achieve the same result as the early saver."