UK WORKERS are worryingly under-prepared for retirement, data out this morning has revealed, with many predicted to run out of savings just seven years after leaving work.
The UK came at the top of a table of the world’s worst savers, with the average Briton facing a financial shortfall of 63 per cent over the 19 years they are expected to live after retiring.
The report by HSBC ranked UK savers behind France, the US, Egypt, China and Mexico.
The global average is a shortfall of 44 per cent, with just 10 years out of an expected 18 years of retirement covered by current provisions – a figure that is expected to worsen as life expectancy continues to rise in developed and developing economies.
“This is yet another wake-up call for people to start thinking about where their later life income is coming from,” pensions campaigner Ros Altmann told City A.M. “There is no money tree for retirees.”
According to HSBC, nearly one in five people working in the UK today saves nothing at all, while 56 per cent are not preparing well enough.
Fifty-seven per cent of UK workers said they would prioritise going on holiday over saving for retirement, compared to two-fifths worldwide.
Despite this lax attitude to saving, people in the UK think they need a retirement income of around 73 per cent of their current earnings to enjoy a comfortable standard of living.
“The UK needs to do more to face up to saving for its old age,” warned National Association of Pension Funds chief Joanne Segars. “For millions of people that will mean working longer or saving more, or both.”
But Segars said that the report did not directly include workplace pensions, which pay an income until death and so could go some way to overcoming the 12-year savings short-fall highlighted by HSBC.
She also said the government’s recent auto-enrolment scheme could help ease the severity of the shortfall by nudging people to save more.
Meanwhile Altmann, who recently stepped down as Saga director-general, blamed the lack of financial planning on a pensions system that “automatically disincentivises you from saving”. Means-testing currently guarantees everyone gets at least £142.70 in state pension per week, though there is a provision designed to boost saving. But this is set to end in 2017 with the onset of the universal state pension.