Auto-enrolment fuels rise in saving for pensions

The senior manager for Scottish Widow’s retirement income and planning division, said: “It is heartening to see that finally people are starting to notice the importance of planning for the future.

“It does not matter whether this is done through increasing their contributions owing to a more favourable economic climate, or starting to make plans for their retirement for the first time thanks to auto-enrolment.”

Yet the need for advice is still clear. He pointed to the 46-page Scottish Widows 10th annual Retirement Report 2014, which found that 30 per cent of people are still desperately in need of advice, as they “would not know how to use their pension savings”.

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Although auto-enrolment had helped people to save, and more people were planning ahead, there still remains a lot of work, the report suggested.

According to the study, 53 per cent of people who took part in the survey were saving adequately for retirement, the highest level since 2009 and the biggest ever year-on-year rise, up from 45 per cent in 2013.

The monthly amount people are saving towards retirement outside a pension has also increased by 141 per cent from £54 in 2006 to £130 in 2014, and the total amount people have in savings and investments is at its highest ever level; an average of £40,000 a person.

Men were more likely to have adequate pension provision than women, with 50 per cent over those aged 50 and above saving, compared just 40 per cent of women aged between 30 and 50. More than 5000 people were interviewed by YouGov for the report.

The research also revealed that only half of those interviewed felt comfortable personally managing their money to provide a suitable income during their retirement years.

David Gauke, exchequer secretary to the Treasury, said: “Automatic enrolment is already dramatically increasing the number of people saving for retirement. The flexibility to access those savings, which will take a lifetime to accumulate, will ensure hardworking savers get the most out of their pension savings.”

Adviser view

Danny Cox, adviser for Bristol-based Hargreaves Lansdown, said: “Pension savings will be among the largest assets during a lifetime. Investors should take time to ensure they are both saving enough and that their money is working hard for them.

“Those who are unsure, or lack the time or confidence to do this themselves, should take advice; saving for a pension is too important to leave to chance.”