Half of over-45s not saving for retirementAnd many not using their tax-free Isa allowance

05 April 2011

Woman with piggy bank

New M&S Money research shows almost half of over-45s are not saving for their retirement

New research from M&S Money reveals that almost half (47%) over-45s are not saving for their retirement. And even those who are saving are not taking advantage of the tax breaks offered by Isas.

The news that half of over-45s are not saving for retirement is backed up by estimates from the Department for Work and Pensions that around seven million people are not saving enough to meet their retirement aspirations. 

Furthermore, government figures show that just under nine million people are active members of occupational pension schemes today, compared with 12 million in 1967. The Pensions Commission says that a person on median earnings should be aiming to retire on at least 45% of what they earned while working.

Savers fail to make use of tax-free wrappers such as Isas

The M&S Money findings show that of those consumers who are planning for retirement, the majority are not taking advantage of tax-free Isas to help boost their retirement savings. Two thirds (66%) of over-45s are not saving into cash Isas while 84% are not saving into a stocks and shares Isa savings account.

Which? principal research Martyn Saville commented: 'Even the planned increase to the state pension for new pensioners from 2015 will not be enough to provide a comfortable retirement, so it's vital to start saving for your later years as early as possible. These figures from M&S Money suggest that too many people are making insufficient provision for retirement, a situation that risks getting even worse as wider budget cuts start to bite and pressure on household incomes increases.

'If your employer offers an occupational pension scheme, it's nearly always worth your while joining it - not only are contributions tax-free for most people, but your employer will usually contribute to your fund as well, effectively giving you a deferred pay rise that will boost your income when you retire.'

Which? pensions and retirement advice

For more information on pensions, read our guides Company pensions explained and An introduction to personal pensions.

For more details of the government's proposed changes to the pension rules, read the news story State pension: changes in the pipeline.

And you can have your say about pensions on our Which? Conversation site: Is auto enrolment the answer to our pension problem?

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