TODAY'S Scottish workers will be the poorest pensioners in the UK when they retire, a new report has found.
The average Scottish worker is on course to retire with a weekly income of £169, just over a third of national average earnings, the annual Fidelity Retirement Index revealed.
On average Scots expect their income to fall just 32 per cent in reti
rement, according to the report. But these expectations are unrealistic, with Scottish workers set to receive just 37 per cent of their pre-retirement income, compared with a UK average of 47 per cent.
The gap between what workers expect in retirement and what they will actually receive is a result of too few people taking responsibility for their retirement provision, according to Simon Fraser, president of the retirement institute at Fidelity International.
"Despite an increasing focus on retirement, there is little evidence that people have taken heed of the warnings," said Fraser. "This needs to be corrected, particularly by contributions to workplace pensions, if we do not want to see the emergence of private pension paupers."
The widespread move from defined benefit (or final salary) to defined contribution (DC) pension schemes has exacerbated the fall in savings levels. Final salary members are set to receive 66 per cent of their pre-retirement income when they retire, compared with 38 per cent for the average DC member.
Fidelity's findings echoed the most recent report from the Association of Consulting Actuaries, which revealed a stark funding discrepancy between final salary and DC pension schemes. It said that while the average combined employee and employer contribution to DC schemes was static at 10.3 per cent in 2007, the figure for final salary contributions was 28.7 per cent. And according to Nigel Callaghan, senior pensions analyst at IFA Hargreaves Lansdown, the difference is likely to widen further.
He said that to receive half their salary in retirement, the average DC pension scheme member would need to save 10 per cent of their income from the age of 20, rising to 16 per cent from age 30 and 20 per cent from age 35.
The full article contains 358 words and appears in The Scotsman newspaper.
