Pensions - Are we contributing enough for our retirement?

The Pensions Regulator has just published its annual report on automatic enrolment, the workplace #pension policy.

In it, it states the following key facts:

1. 87% of workers are saving for retirement in a UK pension scheme today, up from 55% in 2012.

2. Today, 10m workers are saving into a workplace pension compared with 1m in 2013.

3. ￡90 billion was saved into workplace pensions by eligible savers in 2018 up from ￡16.8 billion from 2012

4. In 2012, just 24% of 22-29 year olds were saving in a workplace pension. In 2018 that figure was 84%.

Whilst this is, without doubt, good news, contribution rates to workplace pensions are far from sufficient to enable a "comfortable income" in retirement. The shift from defined benefit (DB/final salary) schemes to defined contribution will continue as employers seek to reduce their pension liabilities. At present workplace pension schemes require a minimum employer contribution of 3% compared to a typical DB scheme contribution level of around 20% of an employee's salary.

There is a government review currently under way in to funding levels which will highlight the positive with regard to uptake and the number of employees saving however the key outcomes will be that contribution levels need to be increased and state retirement age returned to 70 (the age at which it was introduced in 1908) before state benefits are paid.

So if you want to ensure 'financial independence' at whatever age, make sure you obtain qualified, professional and independent financial advice. You can never start too soon. Just count the number of paypackets between now and the day you wish to retire. 10 years is only 120, 20 is 240 and 30 is 360. So how much do YOU need to save in each pay packet to generate a fund sufficient to provide income in retirement to achieve financial independence.