The average pension saver is contributing £7,222 less every year than would be required for a comfortable lifestyle in retirement, according to analysis of new data from HMRC.
The amount they save is just a quarter of the amount required to achieve a comfortable retirement, reckons Plymouth-based advice firm Continuum.
According to the Pensions and Lifetime Savings Association (PLSA)’s Retirement Living Standards, to achieve a comfortable retirement, savers need a minimum pot size of £540,000, needing to contribute on average 20% of earnings in order to achieve this.
The mean salary for UK full-time workers in the 2024/25 tax year was £48,512, according to the Office for National Statistics. That means the average saver would need to contribute £9,702 to achieve a comfortable retirement.
However, the average contribution made by savers into private pensions in the 2024/25 tax year was just £2,480, roughly equivalent to 5% of earnings, according to data from HMRC.
Previous research from Continuum found that less than half of pension savers are confident that they will be able to have financial freedom in retirement. Savers between the age of 45 and 54 were the least confident, with 60% concerned about their finances in retirement.
Those with one or more children under the age of 18 were also considerably less confident about their retirement savings, with 61% of those with children between the ages of 5 and 11 sharing concerns about whether their retirement savings would be sufficient to meet their needs.
Craig Parkinson, IFA at Continuum, said: “Pensions, and the tax reliefs surrounding them, can seem extremely complex and unapproachable for many savers but a good financial adviser can demonstrate how they can add value in this area, demystify the jargon and help dispel the myth that financial advice is only for the extremely wealth.”
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