Millions urged to pay into their pensions

Workers have been warned by Consultancy group Mercer that contribution levels to the majority of pension schemes are too low to provide a good income during retirement. If this amount remains the same, the majority of members will receive more from the state pension than from their occupational plan.

Researchers commented that contribution levels still averaged only 10.4% of a member’s pay. Employers currently contribute about 6.8% of a worker’s wage, with individuals putting in 3.6%. Mercer highlighted that this means workers were left meeting at least 30% of the cost of their pensions while bearing 100% of the risk.

Tony Pugh, a spokesperson for Mercer, said at today’s rate, the majority of workers will receive more pension through the state than their occupational scheme. The problem is more serious the higher an individual’s pay and the older they are on joining the plan.

Mercer is urging employees to add to their pension provision, the consultancy added that by registering people into pension schemes and having companies match employee contributions helped increase savings levels.

Recent research from Baring Asset Management (Barings) showed that 3.2 million Britons are depending on property investments to fund their retirement. Barings commented that this will leave them at risk of fluctuations in the UK property market and interest rate movements.

Discuss this in the Finance Markets forums

Story link: Millions urged to pay into their pensions