Pension savers are only just beginning to feel the effects of the recession now as savings take a hit.
Scottish Widow’s Pensions Index has shown a six per cent drop since last year, the lowest since 2006, and average savings rates were also down.
The index, which monitors pension savings and behavior among its customers, also revealed that 21 per cent of those who should be saving for retirement are not. And 41 per cent of pension savers surveyed admitted that they have saved less because of the economic downturn.
The report reveals that although both women and men are saving less than last year, women are still lagging far behind men, although men have not escaped the downturn as they have seen a greater drop in pension’s savings than women.
Ian Naismith, head of pensions market development at Scottish Widows, comments: "The last two years have been tough on the economy, and we are finally seeing the effects trickling through to pensions savings.
“The previous three years saw a steady rise in the number of people saving adequately for retirement, but now we are seeing the full impact of the downturn on people's retirement pots. While there are signs that the economy is recovering, the nation's saving habits paint a very different story.
“There is still a great deal that needs to be done from both the Government and the industry to better encourage pensions savings for the long term, particularly in the current economic environment. With 21% of those that should be saving putting aside nothing at all there is still a big challenge ahead."
The news comes as the Government sets about introducing some of the most radical pension reforms for 20 years.
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