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Retirement Savings off the menu for the British

Recently published research shows that a significant percentage of the British population are not saving enough to fund a comfortable retirement. In fact the survey, carried out by Scottish Widows, shows that one in four individuals are not saving any money at all. And over half are not adding enough to their pension funds to ensure financial comfort later on in life. Ian Naismith, head of pensions market development at Scottish Widows commented “Despite pensions being front page news for much of the last year, there is still some way to go before the nation is truly on track, When you strip out those people who are relying on final salary schemes three quarters of the UK population are still not on track for a comfortable retirement.”

Research by Friends Provident, another leading pensions supplier, revealed that two thirds of pensioners in the UK would need to save more to live comfortably in retirement. And a report from Yorkshire Bank showed over one quarter of parents were hoping their children would look after them when they retired.

With recent national data showing that the UK savings rate is declining and is also very low compared to most other developed countries, the Government has recently launched a white paper aimed at reversing this trend.

But there are other voices. The Institute of Actuaries has advised pensioners to spend and enjoy more of their savings in retirement. The President of the Institute, Michael Pomeroy stated that a rise in inheritance tax receipts demonstrated that people are dying without being able to enjoy the fruits of their labour. “ Providers need to engineer better, more flexible retirement products that will cater more effectively for longer retirements and changing needs.”

The desire to have greater income in retirement and to be more active could be the reasons for the rapid growth in equity withdrawal products,. Lending to people who will still be paying off their mortgage after they stop working is also on the rise. Many people in their 40s and 50s who have accumulated debts are re-mortgaging to reduce outgoings. This sector of the mortgage market is known as `adverse` or `sub-prime` lending, where mortgage rates may be above the levels normally found on the High Street.

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