Fif th of Scots fear being too poor to retire

ONE in five workers in Scotland thinks they will never be able to afford to retire, according to a damning report.

The majority of Scots are also ‘sleepwalking’ into pensions poverty, investment firm Brewin Dolphin says.

Experts have revealed that cuts in final salary pension deals mean the average person will now need to save a retirement pot of at least £500,000 in order to lead a ‘comfortable’ life after they stop working.

But the Family Wealth Report shows that, on average, Scots expect to be able to save only less than half of that sum by the age of 65.

The report predicts most Scots will have to work beyond retirement age to save enough money to receive the target £25,000 a year needed to live on top of their £8,500 state pension.

Brewin Dolphin chartered financial planner Alan Harvey said: ‘There’s an element that people think the state will look after them and the state will provide but that’s simply no longer the case.

‘A lot of people’s wealth is still in their homes. People think they will be able to sell that property and downsize to part fund their retirement but for the majority of the younger generation that’s not going to be the reality and more and more people are going to be experiencing pensions poverty.

‘This is especially the case for Generation X [those born between the early 1960s and the early 1980s], who do not have the safety net of a final salary pension like the generations before them.

‘Legislation changes mean that, although people now have more flexibility, they also have a greater deal of uncertainty about what they will have at the end of their working life. Our research shows that 47 per cent of people have sought pensions advice, so there is an element of people sleepwalking into this and that needs to change.’

According to the research, which surveyed 5,000 adults around the UK, one-fifth of Scots said they did not think they would ever have enough money to retire, and another 20 per cent said they did not know when they would be able to retire.

When asked, workers north of the Border said, on average, they hoped to save enough to receive an annual payment of £33,815 a year, including their £8,500 state pension. But the survey showed most predicted they would save only £198,382.

A worrying 14 per cent expect to have only a state pension, with nearly four in ten admitting to having no retirement financial plans. Mr Harvey added: ‘Pensions are still seen as being complicated despite efforts to make them less so.

‘People think their pension is far away but it’s important that they engage as early as possible.’

The Department for Work and Pensions said: ‘Pensioner incomes have reached their highest levels since records began thanks to the Government’s commitment to the triple lock and wider reforms.

‘Automatic enrolment into workplace schemes has boosted the pensions prospects of almost ten million people so far, setting them on the path to a financially secure retirement.

‘We know there is more to do in terms of increasing contribution rates, and a further rise is due in April.’

‘People think the state will provide’