The Independent Review of Retirement Income (IRRI) suggests the target for savings should be 15% of salary.
The review further reiterates that whilst the Workplace Pensions regime has engaged individuals on the importance of pensions, we still have a long way to go to ensure that the majority of society enter retirement with a comfortable level of income. Further education is needed focusing on target incomes in retirement rather than “money into the pot” to ensure that individuals have a sufficient time-frame to try and achieve their goals or readjust their plans.
The new flexibility options available to pensions from April last year now mean that it is no longer a case of ensuring that the end pension value is sufficient at retirement but is further complicated by the need to ensure that this does run out or is depleted by high income tax charges.
A further review of the State Pension may mean that Personal Pension Funds could be easily depleted in the early years of retirement if individuals still have the goal of retiring in their mid to late sixties, which for many will mean an average working life of 40 years+, as they will be expected to fully fund income due to state pension ages increasing further.
This further exacerbates the need to have a significant pension pot at retirement.