A report from Barclays suggests the amount retirees need to earn each year to secure a “relatively modest but comfortable” retirement is now £17,500.
The report Steps Towards a Living Pension introduces the idea of a living pension, which is similar to the UK living wage in that it looks at the income-level required to maintain an adequate lifestyle.
The bank attained the figure after it spoke to 2,000 defined contribution (DC) members about what they thought a good retirement outcome would mean.
More guidance needed
In its research, Barclays asked a number of fundamental questions and found scheme members would welcome more help from their employer, including help understanding their current pension contributions.
Overall, Barclays found 47% are also looking for their employer to play a larger role, with 70% who would welcome personalised emails about pension saving.
It also found employees would prefer more guidance on how their current contribution level will affect them when retired, when compared to their long-term lifestyle expectations.
In addition to essential living costs, the research found that the three ‘must haves’ during later life are the ability to pay off money owed, being able to own and run a car, and an annual two-week holiday abroad.
Auto enrolment helping bridge expectation gaps
Whilst there is still a gap between pension expectations and reality, the implementation of auto enrolment means DC contributions are increasing but with more help this could be improved again.
By playing a bigger role in employee development, employers can offer sufficient pensions guidance. Many businesses hire experienced pension managers, management can then ensure the workforce understands their DC pension contributions.
For assistance in finding suitable payroll candidates, call the Portfolio Payroll recruitment team on 020 7247 9455.