Pensions - Articles - Record number of people saving for retirement

 Stuart Price, Partner and Actuary at Quantum Advisory, says: “The huge upsurge in pension members is largely a result of the auto enrolment regime, and although the latest ONS figures have shown a significant increase in those now signed up to an occupational pension scheme, the obvious worry is that when the minimum contribution levels increase, so too will the number of people opting out of the scheme. The survey results next year and the following year will make interesting reading.

 “Another critical concern, is the amount being saved. Many think that because they are in a pension scheme, regardless of the amount being saved, they will be able to enjoy a comfortable retirement, but this is far from the case, and the government need to make people aware of this.

 “The PLSA found that 78% of the people they surveyed did not know whether they were saving enough for their retirement and suggests income targets like those used in Australia could be replicated here in the UK to help people keep track of their projected retirement income.”

 Stuart’s rule of thumb to give people the best chance of a decent income in retirement, is to half your age and pay in that percentage of your salary into a defined contribution arrangement. So, for a 40 year old, the total contribution from the worker and employer should total 20%. With the average amount being paid by employees currently standing at 1% and employers just over 3%, it’s easy to see the industry’s concern.

 Stuart continues: “The planned introduction of the Pension Dashboard in 2019 will no doubt help to address some of these points as it will show an individual all the private pension arrangements that they have along with their State Pension and will provide an indication of the overall income they could expect in retirement, which may, in a good way, frighten individuals into saving more.”