Saving grace

I still worry whether I’m saving enough for my future, or as I like to call it “when I grow up” and – more importantly – whether I’m teaching the kids that a penny in the bank is worth more than a hurled one into the penny falls on the pier, which is how we spent many a rainy day over half-term.

So I was particularly cheered by the news that in general we are getting better at learning how to save rather than splurge. The good news is that teenagers are leading the way. Despite all the dire warnings that Junior ISAs were simply a way of providing teenagers with the wherewithal to go to hell on (L-plated) wheels once they hit 18 and could therefore spend all the money their parents and grandparents has scrimped and saved for years, it turns out we were wrong. According to the investment firm Hargreaves Lansdown, only one in 100 teenagers actually cash in their Junior ISAs when they turn 18 and 98% of them convert them into an adult ISA and continue to contribute to them.

I wonder if they’ll be as conscientious and thrifty when it comes to contributing to a pension? Despite all the scary publicity warning us all about how long we’ll have to work and how little we’ll get on a state pension – cat food canapés anyone? – women are still lagging way behind men when it comes to saving for a pension. Research by Scottish Widows reveals that women’s pension provision is at an all-time low. Only 40% of women are contributing enough into their pension for their retirement compared with 49% of men. The new auto-enrolment pension, which obliges all employers to offer their employees a workplace pension may change things, but even that, according to research by the Pensions Policy Institute, will not be enough to enable people to retire comfortably in their mid-60s.

So, what should we be doing? How much should we be putting by each month?

Well, according the Pension Policy Institute it looks as if we should be saving from the moment we get a “proper job”. For a 22 year old to have even a 75% chance of an ‘adequate’ pension, contributions need to increase from 8% of earnings to 12%.

At the moment average contributions are around 9% of earnings. And the later we leave it the worse it gets – for a 40 year old, contributions would have to increase to 26% of earnings.

So no more penny falls for me – I think it’s time to start putting coins into another coffee jar – I’m going to label this one “Cat food or Caviar?” to concentrate my mind.