State pensioners have been warned over “relying” on payments from the Department for Work and Pensions ( DWP ). State pension payments are increasing 4.1 per cent in April, with the full new amount going up to £230.30 a week, or £11,975.60 a year.
Pete Glancy, head of pension policy at Scottish Widows, warned: “Relying on the state pension alone won’t be sufficient to achieve an income which is equivalent to the most basic retirement living standard, as set out by the PLSA.
“Most people will need at least 20 per cent more than that to pay for the basics, and workplace pensions are usually a great way of building up that additional pot of money, as your employer contributes towards your pension pot and there are also tax benefits.”
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Andrew McMillan, founding partner at NOVA Wealth, warned: “Unless you don’t have a job or you’ve opted out, your company will be contributing ’free’ money to your retirement pot (as long as you are saving a bit yourself too).
“Your employer’s contribution to your pension plus the fact you get tax-relief on contributions, usually more than doubles the money being put away compared to saving it elsewhere. If you’ve maxed out your workplace contributions, it’s worth speaking to a financial adviser about additional ways to grow your retirement pot.”
Paul Leandro, partner at Barnett Waddingham felt this research was a stark reminder that the UK was yet to “defuse the ticking time bomb” that is its pension system. He said: “Time and time again, research has pointed to the inadequacy of pension contributions across all age groups, and until there is a significant increase the situation will only worsen.
“This is particularly concerning as defined contribution, or workplace pensions have become the main source of retirement savings for a significant proportion of the population, and means real change will be needed if people are to have the retirement they desire.”
Brian Byrnes, head of personal finance at Moneybox, believed we were “sleepwalking into a retirement crisis”. “Without systemic changes to how we interact with consumers now, many are inevitably facing a future where they will not have enough saved for a comfortable retirement,” he added.