ADEQUATE AND INADEQUATE SAVERS

This year, 56% of consumers met our definition of adequate

saving, which is the first time its broken out of the band of
45% to 55%. As in the past, men are saving more on average
than women (figure 2), and that applies even to those at
similar income levels. Over-50s save better than under-50s
(62% against 54%). 28% believe their main income in
retirement will come from a defined benefits pension,
a figure which unsurprisingly has been declining steadily.
Figure 2

52%

60%

of women
are saving
adequately

of men are
saving
adequately

19% of people are saving nothing at all for their retirement,

and this figure has hardly moved in recent years. The
improvements have almost all come from people increasing
their savings rates, rather than starting to save. One of
the key measures of the remaining roll-out of automatic
enrolment will be whether it prods habitual non-savers who
largely work for small employers to start some preparation
for retirement. Most say they cant afford to save anything
(see Figure 3) but the incentive of an employer contribution,
or simply lethargy when they are automatically enrolled, may
change that view.
Figure 3

1/5
people dont
save anything

2/3
of those say they
cant afford to
save anything

6 techtalk

Another recurring feature of our research is that the group with

the highest average income is those saving up to 6% of their
income each year. High earners almost always have some
savings, but often it is little more than a token effort, with
around one in five of those earning over 50,000 saving under
6%. Unless they have other resources to use in their retirement,
they could see a substantial drop in their living standard.
Looking at occupational factors, public sector workers are
understandably the best provided for because of the continuing
prevalence of defined benefit schemes, meaning that twothirds (67%) are preparing adequately. At the other end of the
spectrum, only 38% of the self-employed are saving enough,
and thats even with 20% feeling their main income will come
from a former employers defined benefits scheme. Company
size is a very important factor, with 68% of those employed by
companies with 4,000 or more staff preparing adequately, but
only 41% of those whose companies have fewer than 50 staff.

RECOMMENDATIONS
Our report made a number of recommendations for
the future:
1. A comprehensive reform of pension tax relief
to develop a system which is less complex, and
incentivises low and average earners to save more.
This is now happening following the summer
Budget, though we dont claim all the credit for that!
2. After that, a period of calm to embed the new
pensions landscape in the minds of consumers.
The public need the chance to digest the new
pension rules, and educate themselves about the
options now available to them, in order to make
crucial decisions about their financial future.
3. A significant reduction to the automatic enrolment
earnings trigger, and contributions based on full
salary rather than band earnings. This would benefit
lower earners, including many women.
4. Life-long financial education, and innovative use
of technology to enable good quality independent
advice at an affordable cost for lower earners.
There is no single measure that will dramatically
improve levels of saving for retirement, but if these
recommendations are implemented they can build
on the good work already done, including automatic
enrolment, pensions freedom and state pensions
reform, and enable more people to look forward to
a financially secure retirement.