UK employees are among the highest retirement savers in Europe, according to Axa’s bi-annual Retirement Scope survey.
They rank just ahead of neighbours in Germany (48%), Italy (47%) and Spain (41%), although many respondents will experience a substantial drop in income at retirement due to lower levels of state benefit in the UK compared with many other European countries.
UK employees also start saving at a younger age - 29 - compared to 37 in France, 36 in Spain, 32 in Germany and 30 in Italy.
Also, UK employees save an annual average of £4,903, compared with Italy’s £5,213.
However, unlike Italians, who continue to save strongly into retirement (£4,077 per year), saving among UK retirees falls away to just £2,338. Brits are also unaware of the amount of income needed to maintain a desirable lifestyle in retirement.
Due to the results of its survey, Axa is calling for the adoption of the following three-point plan to promote a better retirement savings culture in the UK:
• A clear distinction is required between state and private pension provision by removing means testing and providing a sustainable level of state benefits subject to fair qualifying criteria. The creation of a universal state pension would make it significantly easier for people to plan for their realistic retirement income needs
• The long-term nature of the savings contract should be incentivised, perhaps through allowing access to lump-sum provision from pension schemes early to fund pivotal life events such as the birth of a child, university fees, or a house deposit.
• A full review of incentives to save is needed, including the removal of means testing, and fresh incentives for young savers in order to encourage earlier saving.
Mike Morrison, head of pensions development at Axa Wealth, said: “If we are going to get Britain really tackling the savings gap, especially once in retirement, then we need much closer collaboration across the industry.
“This year's Axa survey shows British workers are gradually facing up to working for longer and being less financially dependent on the state, yet many people are unprepared for the reality of living longer than ever before without a wage packet, and in particular how early on in life they will need to start putting money aside to fund this.
“It is really encouraging to see this government grasping so many of the key issues early on in its tenure, and now it needs to have the courage to create clear blue water between state benefits and the private sector so that clear, unambiguous advice can be given to all.”
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