Almost half of the nation is still not saving enough for retirement, but there has been a small increase in the number people investing in their pension, driven to do so by fear that the credit crunch will leave them in pension poverty.
According to Scottish Widows' 2008 Pension Index, more than 40 per cent of people feel that they are worse off today than they were five years ago, as the credit crisis takes its toll on household incomes that are struggling to keep pace with soaring mortgage
rates and the rises in food and fuel bills
The index found that 51 per cent of Brits are paying money into a pension, up from 49 per cent in 2007, and Scottish Widows believes that the small increase in pension investment has to do with the 37 per cent of people who are worried about not having enough money for a comfortable retirement – up from 34 per cent last year.
The Scottish Widows UK Pension Report is based on the number of people who are aged 30 or older and earn at least £10,000 a year; it uses the Pensions Index and the Scottish Widows Average Savings Ratio to monitor pensions and savings behaviour in the UK.
The savings ratio is what caused the level of those saving adequately for their retirement to rise, but this is thought to be due to a rise in non-pension savings, which consequentially becomes mute when compared with the amount that has been withdrawn alongside deposits.
Ian Naismith, head of pensions market development at Scottish Widows
, comments: "While pensions savings are slowly starting to rise, there is still the real worry that in the current economic environment the nation is not doing enough to prepare for retirement.
"While the savings message that we have been campaigning on for several years is getting through, with people scared that they will not have enough to live on in retirement, this hasn't necessarily translated into pensions savings. Traditionally, in times of economic uncertainty, long terms savings have increased but people need to ensure that they are saving into the right vehicle; the best investments for those seeking security in retirement are pensions"
Meanwhile, consumer confidence continues to run low, with almost a third of people saying they feel pessimistic about their short-term situation, and almost as many feeling pessimistic about the long term.
A third of savers say they cannot afford to put anything aside for savings at the moment, which rises to 60 per cent of people who never save. More than half of people say they will not be able to put anything aside for the next 12 months, as incomes fail to keep up with the cost of living.
"Although the state of the nation's retirement savings is starting to improve, there is a distinct sense of pessimism emerging from our results with consumer confidence falling compared to last year," said Mr Naismith.
"While a number of people are beginning to save more consistently within short term savings vehicles such as ISAs, many people just don't see how they can afford to put anything extra aside and this doesn't look to be improving over the coming months. With the cost of living rising and the nation struggling to make ends meet the outlook isn't getting any brighter."
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