Only 52% of respondents have started saving for their retirement, signaling a five percent drop since last year’s survey. The number of respondents beginning retirement savings is among the lowest in the seven year history of the survey.
“The economy is up, but motivation down,” Sovereign, managing director Simon Swanson says. “With the booming housing market and more buoyant economy people have more disposable income. But this survey reveals an alarming indifference toward saving as people choose to live for today, rather than save for their retirement.“
The survey also showed a 10% drop in the number of people who said they were trying to save as hard as they could, to just 54%. The majority of the people who hadn’t begun saving for retirement were under 30 years old. Respondents claimed they felt guilty about not saving for retirement, but that was not enough to encourage them to start. Their guilt appears to have influenced their motivation, with only 36% of respondents saying they contribute to a regular savings plan.
The Sovereign SaverPulse survey also showed that more than 40 % of respondents found it difficult to decide on how to go about making saving and investment decisions.
“There is a proliferation of products in the market and people are increasingly confused about what to do,” Swanson says. “They’ve got their family and friends, experts and the government all telling them different things. Their response is to do nothing.”
Seventy Eight percent of people said they did not believe the government would provide them with an adequate retirement income, but at the same time, these people are not making plans on how to supplement their superannuation either. Of the 34% of people who do not currently contribute to a retirement savings plan, one in five say it’s because they “hadn’t got round to it”.
The survey does provide a strong indication of the solution people want. A clear majority (71%) are in favour of some form of compulsory savings scheme. In addition, 67% said that if offered, they would participate in an employer-based retirement scheme. The figure of people in favour of tax incentives to encourage savings remains high, at 84%.
“The survey delivers a clear message from the public,” Swanson says. “They want compulsory schemes that remove the temptation to spend money, are simple to understand and operate, and provide a suitable type of investment strategy.”
“The government has just launched a scheme for state sector employees which addresses many of the issues raised in the survey. The survey suggests that the general public is looking for a similar solution for their retirement plans.”
Further Sovereign SaverPulse findings reveal:
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