Debt cited as factor driving retirement savings gap

Debt has been cited by a new report as one of the factors driving the retirement savings gap, while long-term care was also given as a reason the future looks bleak for pensioners.

According to the Chartered Insurance Institute’s (CII‘s) report entitled An Age-Old Problem – Developing Solutions for Funding Retirement, the UK’s retirement savings deficit is estimated to be around £9 trillion.

According to the CII’s director of policy and public affairs David Thomson, this figure is based on Organisation for Economic and Co-operative Development findings which revealed that currently, people typically achieve 30 per cent of their pre-retirement salary during retirement, however the organisation claims 70 per cent is what is needed to live comfortably.

Mr Thomson said: “It’s clear the scale of the problem is massive – but not insurmountable. Our report identifies the three key issues that … lie at the core of the problem.”

He added: “The Government must clearly explain to the public that the state will not, and cannot, pick up the bill for all the shortfall – doing nothing is not an option if the public wants a reasonable retirement income.”

In addition, he explained that the financial services sector must be prepared to take some of the weight of its responsibility and embrace legislation reforms aimed at improving the standards of financial providers and products.

Recently, a study by the Centre for Research in Social Policy found that women are more likely to seek help with their debts than men, with experts citing a lack of awareness or over optimism on the part of gents as a reason why so many put off asking for help.

By James Francis