Scottish workers in top five UK regions with most retirement savings 

04/07/2023
Patrick Thomson (Phoenix Group)

NEW RESEARCH from Phoenix Insights, the longevity think tank from Phoenix Group, shows that workers in Scotland currently have 5% more saved for retirement compared to the UK as a whole, with £118k on average in their retirement savings pots. However, Edinburgh and Glasgow still trail behind the highest saving city in the UK – Southampton – by 14% and 22% respectively.

Phoenix Insights polled 2,500 workers aged over 45 across nations, regions and cities in the UK*, to capture how expectations and preparations for retirement vary across the UK. The findings have been launched through a new interactive pensions heatmap that illustrates the severity of the regional savings gap, as well as other metrics, across the UK.

The findings suggest that workers in Scotland could have to nearly double their current retirement savings pot (needing to increase them by 89%), assuming they are eligible for a full State Pension, in order to reach the amount they expect they’ll need to live comfortably in retirement.**

As the UK’s largest long-term savings and retirement company, Phoenix Group set up Phoenix Insights to help rethink what is needed for people to be prepared for their longer lives and helping to close the pensions savings gap is a vital aspect of that. This latest research shows the urgent need for change.

Phoenix Group’s Patrick Thomson, Head of Research Analysis and Policy at Phoenix Insights, said:

“People across the UK are living longer lives than their parents and grandparents and unlocking opportunities they never had. But this isn’t being felt evenly around the country It is good news that Scotland is ahead of the UK average when it comes to preparing for retirement, but the Scots are still woefully underprepared for when they stop working.

“There are wide differences between cities in the cost of living, the number and quality of job opportunities, and access to good financial advice and guidance. These are just some of the many reasons that can affect people’s ability to save and adequately prepare for retirement.

To enjoy fulfilling longer lives, Phoenix Group recognises that we all need to think differently about our futures, and the futures of those we care about. The journey to retirement has already changed for many people, with some reducing their hours in the run up, others embarking on second careers later in life or choosing to work beyond state pension age for a variety of reasons. There are also those who have left the workforce early due to ill health or through caring responsibilities.

“Our research shows that we can’t afford to take a one-size-fits-all approach to solving these regional imbalances, especially in Scotland. We need to look at better opportunities for employment and savings, and the government’s approach to combatting under-saving must reflect the needs of all parts of the UK to make a real difference to people’s longer lives.”

Phoenix Insight’s interactive pensions heatmap shows that the five top regions with the most and least currently saved for retirement are as below.

Average pension savings amongst UK workers over 45

Top five regions with least savingsTop five regions with most savings
·       North West (£91.4k)·       Yorkshire and Humberside (£97.6k)·       East Midlands (£98.1k)·       West Midlands (£98.4k)·       South West (£101.7k) ·       Greater London (£144k)·       East of England (£136.7k)·       South East (£121.5k)·       Scotland (£118k)·       Northern Ireland (£114k)***

People aren’t talking about their plans for retirement

As the increasing cost-of-living continues to bite across the UK, making decisions about saving for the future can start to feel more challenging. Many share similar concerns as they financially prepare for retirement, and more than half (55%) of workers aged over 45 report feeling uncomfortable or unsure about talking about how they’re doing it.

Scots worry they won’t have enough to live on

Despite above average savings, many in Scotland are still concerned about retirement with over a third (39%) saying that they worry they will need to dip into their savings before retirement. 38% do not believe they have sufficient funds to support themselves during retirement.

Scots worry they will have to work past State Pension age

A concerning number of workers over 45 believe that they will have to continue working beyond State Pension age of 66, with a majority (57%) of those surveyed in Scotland worrying that they will need to do so, compared to the UK average of 55%.

Some Scots do not know what their main source of income will be in retirement

The survey also found differences in where people expect their primary source of income to come from in retirement. Worryingly, 14% of people surveyed in Scotland do not know where their main source of retirement income will come from, while 41% expect to rely on their own private or workplace pension and 32% on the State Pension. This compares to the UK average, where 38% of individuals plan to rely on private pensions as their main source of retirement income, while 31% will rely on the State Pension.

Government must take a regional approach to address pension savings imbalance

To tackle the regional disparities found in retirement readiness, Phoenix Insights is urging the Government to go further to ensure that everyone has the tools and support they need to engage with their pension savings earlier. This includes considering policy at a regional and local level to target action on under-saving, adapting it to the local economy and savings challenges.

To support regional action, the Government delivering on its commitments to lower the automatic enrolment thresholds will increase pension participation across the UK, and committing to a timeline to enact changes to the advice and guidance boundary will ensure that more people can access reliable and tailored financial support.

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