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By Mike Freer, BWCI
A READER has got in touch to ask how much they should save in their pension.
That is a really good question. The answer will, of course, be unique to each of us individually, as we all have dreams and aspirations for our retirement.
It will depend on many factors but the first questions/answers you need to consider are what income level you want/need in retirement and at what age you intend to retire. The earlier you retire, the more savings you will need, as more and more of us are living longer, often into our late-80s or 90s.
You then need to consider your other sources of wealth and income. Do you have other guaranteed income in retirement such as a States old-age pension, other work pension schemes, sale of assets, potential inheritance etc. This will help you plan and determine how big your desired income gap is.
The Global DC Peer Study 2025 research conducted by the Thinking Ahead Institute concluded that 60% of employers surveyed believed that defined contribution pension savings needed to be increased to secure a comfortable retirement for employees.
That infers that the majority of people will potentially struggle financially in retirement or need to work longer than envisaged. Retirement for many may not be the “happy place” you dreamed of.
While educating pension scheme members can help, it is governments that will influence whether defined contribution pension schemes are sufficient to power a decent retirement for all future pensioners.
The introduction of a “workplace” pension is considered by most as the best first step with the caveat that contribution levels by both employer and employee need to be meaningful and not set too low, giving a false belief that it is “enough by default”.
