16:59 28 September 2014
The UK retirement savings have hit the highest rates in half a decade, thanks to a brisk growth in the economy and the introduction of pensions auto – enrolment. As many as 53% of Brits are putting aside enough funds for their retirement, a percentage never surpassed since 2009. The figure also denotes the highest ever year – on – year increase, rising from 45% recorded the previous year.
The introduction of auto-enrolment in October last year – where employees are enlisted in a company’s pension scheme automatically – has been the major reason for this upturn. The average percentage of earnings saved for old age by workers of companies with at least 250 staff (note that the pensions auto-enrolment was first rolled out in this category of companies) has hit 11.6%, a significant rise from 9.7% the previous year. This percentage is higher than the long term minimum auto – enrolment target of 8% of earnings to be launched in three years’ time.
A recuperating economy is another reason put forward to explain the rise in old age coffers. People are able to save more and even more important, they gain confidence in saving. While 37% of those interviewed expressed confidence about their long – term savings, only 32% expressed the same the previous year. There’s a consistent drop in the number of people who alluded to affordability as a reason why they’re not planning to put aside more in the following year. The figure stood at 71% in 2012, dropped to 68% in 2013 and stands at 59% this year. There’s also a significant increase in the proportion that say they’re debt free, rising from 13% in 2012 to 14% in 2013 and to stand at 16% this year.
Financial experts have expressed the rise of the number of people taking steps to plan for their future as signs of good times ahead.