People aren’t saving enough money into their pension pot for a comfortable retirement. That’s according to the results of our State of Retirement report, which found that Brits between 45 and 54 years old currently have an average pension pot worth £71,342.
The annual income figure commonly considered ‘sufficient’ in retirement is between £23,000 and £27,000. Bear in mind that a full new state pension in 2019/20, based on 35 years’ contributions, will be £168.60 a week (£8,767.20 a year), which leaves a shortfall of over £14,000 a year. After just five years, the average pension pot mentioned above would have been used up .
If you can increase your pension contributions, doing so, then, seems like a no-brainer. And thankfully, recent and upcoming pension changes will help.
Following automatic enrolment, instead of 47% of UK employees being in a company pension scheme, as was the case in 2012, some 73% now automatically save each month .
Minimum workplace pension contributions have also increased, and are set to increase again in 2019.
Before April 2018, only 2% of a worker's qualifying earnings went into their pension, including an employer's contribution of at least 1% . In April 2018, this rose to 5%, with at least 2% coming from the employer. The amount rises again, in April 2019, to 8%, with employers paying at least 3% of that minimum total.
To put this into context, if you earn £2,500 gross per month, from April 2019 your employer will put £75 (which is 3% of £2,500) a month into your pension and you’ll be personally contribution £125. In total, £200 a month will be going into your pension fund.
As with all these matters, seeking out expert independent advice is paramount before taking a major step.
 Department for Work and Pensions, 2017. Benefit and pension rates 2018 to 2019, GOV.UK. https://www.gov.uk/government/publications/proposed-benefit-and-pension-rates-2018-to-2019
 Office for National Statistics, 2018. Pension participation at record high but contributions cluster at minimum levels, https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/workplacepensions/articles/pensionparticipationatrecordhighbutcontributionsclusteratminimumlevels/2018-05-04
 The Pensions Regulator, 2017. Knowing your client's ongoing duties, https://www.thepensionsregulator.gov.uk/en/business-advisers/automatic-enrolment-guide-for-business-advisers/9-knowing-your-clients-ongoing-duties/automatic-enrolment-earnings-threshold
 Daniel Redwood, Leandro N. Carrera, John Armstrong and Teemu Pennanen, 2013. What level of pension contribution is
needed to obtain an adequate retirement income? LSE Research Online, https://www.gov.uk/government/publications/proposed-benefit-and-pension-rates-2018-to-2019
 Office for National Statistics, 2018. Trends in self-employment in the UK, https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/trendsinselfemploymentintheuk/2018-02-07