Less than half of all Britons are not saving
enough for their retirement, according to a new report by Scottish
Widows.

The Scottish Widows Pensions Report
2012 said that based on this year’s new low average savings
levels, an average saver retiring at 65 would receive just over
half the amount they feel they need.

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It said the total pot for an average saver is
around £150,000 in today’s terms which would only provide an annual
pension of £5,700. 

With the addition of the UK state pension this
would generate a yearly income of approximately £13,000 which falls
drastically short of the £24,500 annual income people are looking
for and equates to a total shortfall of £300,000, noted the
report.

Expectation gap

To meet current expectations, Scottish Widows
said an average saver needs to save an additional £4,500 a year or
£375 per month to plug this expectation gap.

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The also found that 30% of respondents
prioritise debt repayment, and 40% prioritise living expenses above
saving for retirement.

Ian Naismith, head of pensions market
development for Scottish Widows, said: “People are saving less for
old age yet their expectations remain high as the majority fail to
recognise the harsh reality of retirement. With an aging
population, and ongoing economic difficulties, it has never been
clearer that we need to do more to shift people quickly from their
unrealistic ‘rose-tinted’ expectations of retirement.”

He was optimistic about the great opportunity
presented by auto-enrolment but stressed the need for a
“compelling” and understandable promotion campaign by the
government about the need to save for retirement.

There were two regional bright spots in the
5,200 person survey, with more than 50% of savers in Scotland and
Yorkshire and the Humber saving adequately for retirement.