Pensions  

UK savings gap to reach £350bn by 2050: Deloitte

UK savings gap to reach £350bn by 2050: Deloitte

UK savers need to find an additional £10,000 a year per person between now and retirement if they are to plug a growing pensions gap, research by Deloitte has found.

According to forecasts by the consultancy, the yearly savings gap per person, on average, is set to increase between 2015 and 2050 from £8,000 to £10,000 – at total nationally of £350bn.

This forecast is nearly £32bn more than the firm estimated just five years ago. According to its analysis, reasons for the widening savings deficit include strong population growth, which is forecast to reach 77m by 2050; pressure on the public purse; the gradual closure of defined benefit schemes; and, the rising cost of health care and long-term care.

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Andrew Power, investment management partner at Deloitte, said: “If savers want a particular standard of living at retirement, then they will need a greater awareness of what must be saved today.

“One possible solution would be to make it easier for people to securely access and see all of their pensions – whether public or private – in one place.”

Even auto-enrolment will not be enough, although it is a step in the right direction. Mr Power added that the investment management industry could help to bridge the gap by up to 50 per cent by developing straightforward products using technology, and being clear in their communications with savers

Adviser view

Glynn Jones, divisional director for national advisory firm LEBC Group, said employers also needed to help people save in the workplace.

He said: “Employers have not always found it easy to comply with the legislation and, in our view, it is likely that many employers who have already staged, have possibly used systems that were not comprehensive or they have used sticking plaster to cover the gaps.”