Pension income is a crucial, yet fragile element of retirement. In the modern economy, a person’s ability to retire is largely dependent on how much they were able to save in their working life but this brings with it certain challenges.
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Today, Scottish Widows released research which found that workers in certain sectors could face a lifetime of “playing catch-up” with their retirement savings.
This has, of course, been exacerbated by coronavirus but many within certain fields were struggling to adequately save for retirement before the disease emerged.
Sottish Widows came to their findings using two rounds of research, the first being analysis of YouGov data from over 5,000 respondents.
The second focused on the impact of coronavirus and again utilised information from over 2,000 YouGov users.
The retirement report from Scottish Widows found that:
- More than a quarter (27 percent) of those who work in travel and the arts have not yet started saving into a pension
- Two-thirds (67 percent) of retail workers are worried that if they ever did retire, they would quickly run out of money
- Three in five (62 percent) construction workers feel they are not preparing adequately for retirement
- Only 18 percent of restaurant workers are optimistic about retirement
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These findings came before the worst of the pandemic kicked in, meaning that the situation could be even worse.
Those in particularly suffering industries are likely to struggle the most, an example being the retail and aviation sectors who have reportedly cut 11,000 jobs in two days.
Accommodation and restaurant businesses have also suffered heavy losses, with almost 50 percent of employees in these industries having been furloughed in recent months.
The pessimism on retirement within these sectors could also be attributed to working practices according to Scottish Widows.
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Their analysis detailed that employers within these fields will often only contribute the legal minimum into their pensions.
As an example, it was found that more than 85 percent of workers in accommodation and restaurant businesses receive an employer pension contribution of less than four percent.
Pete Glancy, Head of Policy at Scottish Widows, commented on the dire state of affairs “A record high three out of five people are now saving adequately for retirement.
“Yet, long-term prospects are still to a large degree defined by the industry in which people work.
“That’s because, while auto enrolment has transformed the retirement prospects of millions, minimum contributions are still far below what is needed to provide a good standard of living.
“We recognise that the next 12-18-months is going to be about businesses getting back on their feet, but many individuals have taken a substantial hit to their finances and the fear is that the gap can’t be closed, meaning they face a lifetime of work as they struggle to afford to retire.”
Pete concluded by explaining what could be done to fix this problem: “We must face up to the fact that the pension system unfairly penalises those who are in low paid work.
“Scrapping the minimum earnings threshold would allow millions of multi-jobbers to benefit from auto-enrolment like everyone else, and is long overdue.”
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