More evidence of Britain's pensions crisis

Oct 21 2003 by Brian Amble Print This Article

A new report launched today by the Association of British Insurers (ABI) shows the real extent of under-saving in the UK, with more than a third of the working population – some eight million people - not saving enough and eight out of ten of these not saving at all.

‘The State of the Nation’s Saving’ is the first of a new quarterly index, conducted by YouGov on behalf of the ABI. It is designed to shed light on, and regularly monitor, savings behaviour in the UK.

The report highlights that many are bewildered and confused about the choices that face them. There is very little faith in the Government as a provider of pensions and people are discouraged by the system of means-testing which is already affecting the many rather than the few.

The survey revealed that only one in fifty people thought that the basic state pension would pay enough to live comfortably on when they retired. Most thought that the state pension would continue to be eroded and would cover little more than basic bills.

Last month, the ABI called on the government to take urgent steps ‘to avert a full-scale pension crisis’ and released figures showing that only 15 per cent of the public trust the Government not to let them down on their pensions.

But despite this, most people have no idea how much they needed to save towards a comfortable retirement. The situation is exacerbated because two-thirds of those questioned said they had ‘fairly bad’ or ‘very bad’ understanding of pensions.

And a further third of people said they were mainly investing in property for their retirement - not surprising considering the buoyant state of the housing market.

The lack of a clear message that it pays to save and of incentives to encourage saving, means that too many are doing nothing.

Commenting on the findings, Joanne Segars, Head of Pensions and Savings at the ABI said:

“For the first time we are able to assess the scale of the savings gap in human terms. This report identifies the factors that underlie low saving levels, enabling us to address the issues in practical terms.

“Our survey paints a compelling picture of people who want to take responsibility for their retirement but are worried and uncertain about how to do so. We need to create a framework that informs, encourages and enables people to make decisions and take ownership. It is clear we have some way to go.”