On the go: UK savers need to save at least £800 a month to achieve the moderate living standard outlined by the Pensions and Lifetime Savings Association, research by the Institute and Faculty of Actuaries has found.
The figures show employees will need to put aside well above the 8 per cent minimum automatic enrolment contribution rate to achieve a moderate or comfortable income in retirement, on the back of the retirement living standards published earlier this month by the PLSA. The state pension and current AE contributions will only be enough to provide a minimum level of income in retirement.
An individual aiming for a ‘minimum’ income retirement target should be saving £86 a month, on average, from the start of their working life.
But to work towards the ‘moderate’ level of income, the amount of savings required rises to £799 a month on average over their entire working life. This represents around a quarter of earnings for someone on an average full-time salary.
Source: Institute and Faculty of Actuaries
Mark Williams, chair of the IFoA’s pensions board, said: “Modern workplace pensions require people to take responsibility for their own retirement saving and planning, but clear and consistent information on how much they need to save can be hard to find.
“In our survey, almost a third of respondents said they did not know what constitutes a ‘good pension pot’.”
He added: “We urge the government to assess whether the current balance between the levels of employee and employer contribution is appropriate.”
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Steven Cameron, pensions director at Aegon, added: “The positive aspect of AE is that people are taking more interest in their retirement savings and are increasingly willing to think ahead and take action.
“While the figures released by the IFoA show the size of the challenge is considerable, especially at a time when people have competing priorities for their money, the good news is it can be done.”
