Just over a quarter of savers (26 per cent) who have a workplace pension said their current amount of pension saving will not be enough to get by on when the time comes to retire.
According to a survey by the Pensions and Lifetime Savings Association, UK households are feeling the pinch off the back of the cost-of-living crisis, war in Ukraine and two years of Covid-19 restrictions.
The survey found that those aged between 35 and 54 (29 per cent) were most concerned that they would not have enough to live off, compared to those aged over 55 (20 per cent).
Just under a third of women were concerned (31 per cent), compared to one in five men (21 per cent).
PLSA said savers reported they have long-term concerns as to their financial health when they stop working.
Around 35 per cent of those in low-income households – whose total income is up to £14,000 – and 31 per cent with an income of between £14,000 and £28,000 stated their concerns.
This figure drops to just one in five (20 per cent) for those in households with an income of more than £48,000.
Nigel Peaple, director of policy and advocacy at PLSA, said: “We have long argued that current contribution levels are not likely to give people the level of retirement income they expect or need."
Retirement living standards
The survey, which was conducted on behalf of the PLSA by Yonder Data Solutions in January 2022, found out of the 2,093 adults surveyed, one in five people (21 per cent) said they save into a pension to ensure they have a minimum standard of living in retirement.
However, around two in five (41 per cent) said they save to ensure they have a moderate standard of living in retirement – a pension that will meet their basic needs and allow them to do some of the things that they would like to do.
Meanwhile a third (33 per cent) do so to ensure they have a comfortable living standard; saving enough to ensure that they have enough money to live comfortably, including doing most of the things they would like to do.
When asked to think about what their current level of pension saving will provide for them in retirement, one in eight (12 per cent) said they did not know what standard they would achieve, and 1 per cent said that they never plan to fully retire.
According to PLSA, the current standards suggest that, roughly, a single person will need £11,000 a year to achieve the minimum living standard, £21,000 a year for moderate, and £34,000 a year for comfortable.
For couples, it is £17,000, £31,000 and £50,000, respectively.
PLSA said in order to help savers achieve a better standard of living in retirement, the government should increase the level of automatic enrolment contributions from 8 per cent of a band of earnings to 12 per cent of all salary in the early 2030s.
Peaple said: “As the government seeks to ‘level-up’ the economy, narrowing wealth disparities between regions and different demographics, we think now is the right time for the government to commit to levelling up pensions, gradually, over the next decade, in three affordable steps.