Scottish savers facing pensions shortfall
Only eight per cent of the Scottish population are financially on track for the retirement they aspire to have, according to recent figures.
While this has increased from five per cent in April last year, it is still significantly behind the UK average of 12 per cent, according to the research conducted by Aegon UK.
In comparison to the rest of the UK, Scottish pension savers are contributing £60 less a month to their pension, totting up a £720 shortfall over the course of a year. People in Scotland are also less engaged with their pension savings compared to the UK average. These factors have contributed to Scotland having the lowest average readiness score, of 48, in the UK.
Steven Cameron, Aegon UK pensions director, has said however that all is not doom and gloom for Scottish pension savers as encouraging signs show room for optimism.
He continued “Despite their reputation for prudence, Scots are lagging behind the UK generally but on a positive note, across Scotland, since last year, over 150,000 people have improved their saving behaviour, or changed their aspirations for retirement.
“But the job is far from done, 92 per cent of the Scottish population are still falling short of their retirement targets. It’s important that new UK-wide initiatives, such as the Lifetime ISA and the secondary annuity market, are clearly articulated, and don’t detract from the progress that auto enrolment, and the pension freedoms have already made.”
Mr Cameron also said that the Scottish Government also needs to ensure confusion is not created around pensions tax relief if it exercises its new powers to set income tax bands and rates.
He added: “We must avoid complex changes to encourage the UK population to continue to thrive in their planning for later life.”
One of the key drivers of the change has been people becoming more realistic about the level of retirement income they are likely to receive. Average annual income expectations have fallen from £40,200 in April 2015, to £33,600. This, coupled with the 10 per cent of the Scottish population who are saving more into their retirement pot as a direct result of the pension freedoms, means the gap between the income people would like and the income they are set to receive has narrowed by £7,200 in the last year, although this still leaves a huge gap of £21,300 to address.