It's all good news right now on the retirement savings front
What scares people away from saving for later life?
I read a comment from one expert this week that I'll present here for your consideration: it's because either they can't afford it, or the pensions system confuses them as it seems to be changed every fortnight by politicians, or they prefer to buy a house instead, because the property market's being ‘juiced up' by these same politicians.
Well, to counter that apprehensiveness about pensions, I decided to go digging for truffles, and zoom in only on the positives in the all-singing all-dancing world of retirement planning at the moment. This week then, it's all good news.
Well, first, Scottish Widows has just found that more people than ever are saving for their retirement, and more importantly, more people are saving enough for their retirement.
In fact, well over half (56 per cent) of over-30s are saving enough for their retirement, which is up from last year (53 per cent) and marks the highest level recorded since ‘the Widow' started taking her notes on this 10 years ago.
This is a fairly impressive improvement, given that, in report after report over the years, pension savers were always a minority – I remember Halifax saying back in 2009 that only 48 per cent were saving, at that point.
Men are still more likely to be saving adequately for their later years, at 60 per cent compared with 52 per cent of women, but this has traditionally been the case and is linked to the fact that women are more likely to take a mid-life career break to bring up young children, and often return to part-time rather than full-time jobs thereafter.
More good news: the report also found that, on average, savers are finally putting away the amounts they need for a comfortable old age.
For the first time in 10 years, the average proportion of earnings being put away each month towards retirement has reached Scottish Widows' recommended levels of 12 per cent including employer contributions.
This is a big improvement since 2006, when people were typically saving just 6 per cent of earnings, and since 2013, when the average was 9 per cent.
One particular group who are building for a secure retirement are those who expect their main pension to come from a defined benefits or final salary pension.
Final salary pensions, as we know, are generally in decline, due to the costs they involve for employers. Of schemes that still exist, only a fifth (22 per cent) are still taking in new members. So more of us are saving, and more of us are saving enough.
What else is new and good to hear about pensions these days?
Well, now that we've just passed the first 100 days since new pension freedoms came into effect this spring, the Association of British Insurers (ABI) says that savers have rallied with joy to take advantage of them.
For the first time, of course, we can now draw down as much as we like from our pension pot, and pretty much spend or re-invest it as we like too - as long as we pay our taxes first!
In April and May, savers took out over £1 billion in 65,000 cash withdrawals from pension pots, and the average pot taken was £15,500.
They are spreading their wings and revelling in the new options that are available, with over half of their withdrawals going into income drawdown products, rather than buying an annuity.
ABI's figures showed £630m going to buy 11,300 annuities, but a massive £720m going for 10,300 income drawdown products. Compare that to 2012, when 90 per cent of total sales were annuities, and you get a real feel for how things have changed.
Another bit of good news in this regard is that the message seems finally to be getting through to people that they will do better for themselves if, working with an independent financial adviser of course, they do some ‘shopping around' when re-investing their pension savings.
This is clear evidence that the whole of the UK reads this esteemed column, where I have been banging away for a good while on the need to shop around (using your ‘open market option' or OMO, remember?).
This avoids the danger of taking the first product you're offered – usually by your existing pension provider – which may not be the best deal.
Since April, the ABI says that 45 per cent of annuity sales were to people who switched away from their own pension company, while over half (52 per cent) of sales of income drawdown products were also to people who switched.
But just to bring you down to earth again after so much unadulterated joyfulness and cheer, there is one negative finding in these reports that's worth noting: Scottish Widows said one in five (20 per cent) across the UK, or 6.2 million of us, are still not saving anything at all for our retirement.
:: Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005