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Less than half saving enough for retirement

More than half of those who could, and should, be preparing financially for later life are not saving enough and one in five is saving nothing at all, according to a report by Scottish Widows.

Of those aged over 30, not retired and earning more than £10,000 per year, just 45 per cent are making ‘adequate’ savings of at least 12 per cent of their income. This is down by one per cent since 2012.

Despite this, expectations for retirement income and the level of debt with which people enter old age are rising. The survey found that the level of annual income people would feel comfortable living on aged 70 has increased by £700 – to £25,200 – since 2012. However, it also revealed that a third of those already in retirement are still paying off average non-mortgage debts of £5,682.

In other pension news, analysis by Prudential found that self-employed workers are missing out on employer pension contributions of £2,232 per year, based on the average UK salary of £26,664. Over the course of a 41 year average working life, this amounts to £91,512 that self-employed workers – who do not have the option of joining a company pension scheme – miss out on.

Retirement expert at Prudential, Stan Russell, said: “Self-employed workers have to be even more proactive when it comes to saving for retirement, as they can’t benefit from employer contributions in a company pension scheme. Saving into a pension gives valuable tax relief, while professional financial advice can be helpful in ensuring that they’re saving enough for a comfortable retirement.”