Edinburgh beats rest of UK for retirement savings

Pensioners play bingo in Sighthill Community Centre in Edinburgh. The capital has come out on top of a retirement savings poll. Picture: Robert Perry

The UK’s first retirement savings map reveals the regions which are best equipped for the future and it shows Scotland, and England’s north east and north west are the most financially prepared, while the East Midlands, east of England and south west are falling behind.

Overall, people are expecting to face a financial shortfall of £96.67 per week when they are in retirement.

While Edinburgh savers might be the most proactive, the research found they are still facing a shortfall of £93.22 while those in Glasgow face £101.44.

The survey, which looked at the saving plans of 18,000 people across the UK, also reveals the disparity across the UK’s regions and cities.

Those in Scotland, the West Midlands, and the south east are investing the maximum possible they can afford into retirement funds to secure their long-term financial future.

In contrast, the East Midlands, east of England and the south west are areas of savings deficit, where more than 50 per cent of people are not saving into a pension at all.

The savings map, compiled by life assurance company Friends Life, paints a detailed picture of savings habits across the UK.

Income from the state pension, savings, investments, property and private and workplace  pensions were considered some of the most popular methods for people to fund their retirement.

Andy Briggs, group chief executive at Friends Life, said: “It is encouraging to see areas of the UK where savers are actively managing their finances for their future. Acting today means these people are best positioned to secure the future they want in retirement.

“However, our retirement savings map shows that there are worrying areas of financial deficit where a combination of a lack of awareness, lack of planning and soaring living costs mean a future situation of income shortfall.”

Mr Briggs went on: “It is concerning there are regions of pension deficit within the UK and as a business we want to support these customers in securing as much income as possible for their future.

“We, as an industry, together with government, employers and financial advisers, need  to do everything we can to help people in the UK save for their future to secure their financial wellbeing during retirement.”

Despite this, the average total amount of retirement savings is not sufficient once living and housing costs have been factored in, with people facing an expected financial shortfall each week.

Most savers expect to need £409 per week in retirement when their actual income from their retirement savings will be on average £312 per week.

The research highlighted by the study reflects previously voiced fears about people being left out of pocket later in retirement. There are now fewer than seven months to go before the government’s pensions shake-up takes effect.

Under the changes, which were set out in the last UK Budget, retirees will be able to cash in their entire pension pot from the age of 55, including 25 per cent tax-free. The remainder will be taxed at the individual’s marginal rate, rather than the current 55 per cent charge.

The Treasury has estimated that around 130,000 people a year will take advantage of the changes to withdraw an average of £40,000 each from their pension.

But there are concerns that many will dilute their savings prematurely and be left out of pocket later in retirement, particularly those unable or unwilling to access financial advice.

The average 62-year-old woman retires with private savings of £19,500, according to MGM – half the amount saved by the equivalent male.