Pension experts said that today’s figures from the PLSA about retirement living standards should be a ‘wake-up call’ for savers.
The rise in the amount needed for a moderate or comfortable retirement should make pre-retirees think about building up their pension pot to meet their post-work requirements, they agreed.
The PLSA figures showed that for a moderate lifestyle, a single person would need £31,700, a rise of £400. A couple would need £43,900, up by £800.
For a comfortable retirement a single person would need £43,900 per year. A rise of £800. A two-person household would need £60,600 – up £1,600.
Alexandra Loydon, group advice director at St James’s Place said: “While it’s encouraging to see that the amount someone needs to secure a minimum standard of living in retirement has fallen from £14,400 to £13,400, it’s important to understand that this only covers your basic needs does not include a car, limiting you to one week-long holiday in the UK per year and eating out once a month.”
Helen Morrissey, head of retirement analysis, Hargreaves Lansdown, said: “While such figures can provide a useful rule of thumb, they aren’t hard and fast. Anyone wanting something more luxurious then the data shows their pension is going to need to work much harder - a comfortable lifestyle is said to cost £43,900 per year.”
Gail Izat, managing director for workplace and retail intermediary at Standard Life, said that auto-enrolment minimums are not enough to help most achieve a moderate standard of living.
Ms Izat said: “The reality is that current minimum auto-enrolment contributions of 8% are unlikely to be enough for most people to achieve the lifestyle they hope for in retirement. We need a sustainable roadmap towards higher contributions which we hope the next phase of pensions review will take into account.”
Tom Selby, director of public policy at AJ Bell, agreed, saying that: “Without a scaling up of minimum contributions, millions of people will sleepwalk into a retirement shock and be forced to choose between working longer or living on less money in their later years.”
Ms Loydon said: “Today’s update from the PLSA that for a moderate retirement a single person now needs £31,700 per year should serve as a wakeup call for savers across the country to start thinking seriously about their pension and building up their retirement pot.”