Pension alert as millions panic at retirement pots – middle-aged women mostly hit

The soaring cost of living means 26 per cent of savers think their current retirement nest egg will not be enough to pay the bills in old age.

The soaring cost of living means 26 per cent of savers think their current retirement nest egg will not be enough to pay the bills in old age.

And midlife employees are the most worried, according to the Pensions and Lifetime Savings Association (PLSA).

Those aged between 35 and 54 (29 per cent) are more concerned they will not have enough money.

This compares to 20 per cent of those aged 55-plus, found a survey of 2,093 people.

The gender pensions gap also plays a part with almost a third of women doubtful (31 per cent) compared to just one in five men (21 per cent) who generally enjoy bigger pensions.

Low earners are most worried that their workplace pension is not going to pay out enough.

As many as 35 per cent of those earning up to £14, 000 and 31 per cent of those on between £14,000 and £28,000 stated their concerns.

This figure drops to just one in five for those employees earning £48,000.

Spiralling energy bills, a hike in National Insurance and rampant inflation driven by the Ukraine conflict are fuelling the concerns, say the PLSA which is calling for an increase in automatic enrolment contributions to workplace pensions.

By law, employers and employees enrolled into workplace pensions must make minimum contributions into them. This is currently eight per cent of eligible earnings.

Within this, the employer must pay in at least three per cent with the employee making up the remaining five per cent.

But paying in just the minimum is unlikely to give most people the comfortable retirement they want.

And pension experts argue that the Government should increase the level of automatic enrolment contributions to 12 per cent by the early 2030s

Nigel Peaple, director at the 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.

“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.”

However, at a time when people are being squeezed by surging living costs, it may be a struggle for some people to pay in any more than the minimum.

The current Retirement Living Standards report says a single person will need about £11,000 a year to achieve the minimum living standard, £21,000 a year for moderate, and £34, a year for a comfortable retirement. Couples need between £17,000 and £50,000.

A majority of people save to get either a moderate (41 per cent) or comfortable (33 per cent) Retirement Living Standard.

But far fewer people think their current pension saving will achieve this with slightly over a quarter (27 per cent) saying moderate and just 14 per cent comfortable.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “Auto-enrolment got people saving but without engagement many people still won’t get the outcomes they hope for in retirement.

“Simple things like checking your pension value, revising how much you put in and getting the right investments for you can have an enormous impact, and yet not enough people are doing it.”