How Much Should You Save into a Pension?

We try to identify how much you should save for retirement

Ignorance of pensions

Eighty percent of people just don’t know whether they are putting enough money aside for their retirement or doubt that they are doing so.

The people who feel who feel least positive about their pensions savings are most likely to be female, renting their home and on lower pay.

The people in the other twenty percent are most likely to be male, homeowners and high earners.

Auto enrollment

Whilst auto enrollment has ensured that people are saving something towards their retirement the problem is that many people assume that the 8% of earnings contribution is enough to secure a comfortable retirement.

This 8% is the minimum contribution that people who have not opted out of auto-enrolment make into their pension, on their qualifying earnings, which is currently between £6,136 and £50,000.

The 8% is made up of a

  • workers 4% contribution supplemented by 1% tax relief and
  • 3% contribution from employers

The assumption that many people make according to the research by the Pensions and Lifetime Savings Association, separately by Atlas Master Trust, is that this minimum contribution will provide for a comfortable retirement, when it won’t.

Opt in and supplement

The advice that pension experts seem to offer most often is that people should be saving 12percent of their earnings in a pension scheme of some form.

But, some suggest that a more sensible figure including their employers pension contribution and tax relief would be 15percent of their pay.

Achieving best case

​In a best case scenario a 15percent pension contribution could be achieved if they have an employer who matches their contributions.

The 15 percent contribution could be achieved with a little help from 1.67percent tax relief if both employee and employer paid about 6.7 per cent of the employees salary into a pension fund.

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