Savings levels are now at a five year high, according to the 10th Annual Retirement Report from Scottish Widows published today (11 June 2014).
The number of people saving adequately for retirement at 53% is the highest it has been since 2009 and the biggest ever year-on-year rise, up from 45% in 2013.
The monthly amount people are saving towards retirement outside a pension has also increased by 141% from £54 in 2006 to £130 in 2014.
It seems that after many years of stagnation we may just have turned a corner and the message seems to be getting though that there is a need to take retirement planning and saving seriously.
There are obviously a number of contributory factors at play here – the upturn in the economy, greater feelings of job security and, of course, the impact of auto-enrolment. People are also becoming increasingly aware that their life expectancies are increasing and that achieving a reasonably comfortable lifestyle in retirement has to be both paid for and planned many years in advance. There is also an acceptance that working longer beyond 'normal retirement age' will be necessary for many more in the years ahead.
The only blot on the horizon in what is otherwise a most encouraging report is the suggestion that in many instances there appears to be a misalignment between expectation and reality and that perhaps as many as 60% of the population do not know what they need to save to secure their desired level of income in retirement. This points to the need for more guidance and advice to be provided to consumers both in the workplace and elsewhere with a view to ensuring that they get the best returns from their pension saving in all circumstances.
It will also be necessary sooner rather than later to consider increasing the minimum contribution levels specified for auto-enrolment to secure better outcomes for contributors and ensure the early success of the policy is maintained.