Following a review, the new Pensions Minister, Torsten Bell has confirmed auto-enrolment (AE) thresholds will be maintained at the current levels* for 2025/26.
*This means a minimum contribution of 3% from employees, and 5% from employers to bring total pension contributions to 8%.
Jonathan Watts-Lay, Director, WEALTH at work, comments; “It can be difficult for someone to judge how much they may need to save for retirement as everyone has different circumstances and different expectations, However, we know the current levels are too low and may not provide an adequate standard of living for many.”
In fact, according to the Pensions and Lifetime Savings Association (PLSA ), a single person will need about £14,400 a year to achieve the minimum standard of living (this would cover all a retiree needs plus enough for some leisure activities such as a week’s holiday in the UK and eating out occasionally); £31,300 a year for a moderate standard of living (one foreign holiday a year and more frequent eating out); and £43,100 a year for a comfortable standard of living (this would cover all a retiree needs plus two foreign holidays a year and some luxuries such as regular beauty treatments). For couples, it’s £22,400, £43,100 and £59,000, respectively.
Watts-Lay adds; “Unfortunately, there seems to be a general lack of pension understanding and engagement. Our research found that more than a fifth (21%) of employees have no idea how much their pension is worth, with almost a quarter (24%) having no idea how much they will need to have for a comfortable retirement.”