A RECORD HIGH

FOR SAVINGS THE

SCOTTISH WIDOWS
RETIREMENT REPORT
2015
Ian Naismith

Theres been a definite upturn in the mood on pension savings in recent months. Around
5.3 million workers have now been automatically enrolled, though the pace has slowed
considerably with only 133,000 added in the first half of 2015. As a direct result of
automatic enrolment, active membership of pension schemes has been rising since 2012,
following a decade of decline.
So it was not unexpected, though very welcome, that the
eleventh Scottish Widows Retirement Report revealed that a
record number of people are now saving adequately, and that
current savings levels have reached our benchmark 12% for
the first time. But does that mean were now saving enough
as a nation?

WHAT IS ADEQUATE PREPARATION FOR

RETIREMENT?
Weve used the same definition of adequacy for the last
eleven years. It is that someone is either expecting to get

4 techtalk

their main retirement income from a defined benefits scheme

or is saving at least 12% of their income for retirement.
Its therefore a snapshot of current efforts rather than an
assessment of total savings. The 12% includes employer
contributions and non-pension savings for retirement, but
not any money invested in property.
The 12% assumes that the income we need in retirement to
feel we are adequately provided for is related to our earnings
while working, but lower earners need a higher replacement
percentage than high earners. Figure 1 illustrates the potential
replacement rates at various income levels from a 12% a year
contribution plus state pensions.