Fewer than one in 10 working people are on course for a comfortable retirement, according to the latest Retirement Living Standards from trade body Pensions UK. The cost of that comfortable retirement – defined as enough to eat out weekly, take a two-week Mediterranean holiday each year and replace your car every five years – has risen 35 per cent in four years. Back in 2022, it was £33,600 a year; now it’s £45,400 a year. To buy an annuity that would pay this amount, you would need a pension pot of around £691,000 according to pension specialists Quilter.
Employees have an easier time getting to this figure than many self-employed workers, because they have the help of auto-enrolment. As long as you don’t opt out, a minimum 8 per cent of your income goes in every month, paid by the employee, the employer, and the government in the form of tax relief.
But auto-enrolment has a flaw: it does the bare minimum unless you intervene. Adrian, 41, a delivery driver who lives in Watford, learned this the hard way. He has £3,000 in his workplace pension he has been saving into for about a year, plus roughly £10,000 sitting in pots from previous jobs. It is not a huge sum for a 41-year-old, and he knows it.
