Six million face pensions crisis

MORE than six million middle-class workers are failing to save enough for retirement.

An official study shows 40 per cent of staff eligible for the Government’s flagship retirement scheme are ‘under-saving’ – putting away too little to maintain their standard of living when they stop work.

The Department for Work and Pensions says 12million people are not saving enough – despite more than half of them earning at least £34, 00 a year.

The findings are the result of a study into auto-enrolment, introduced in 2012 to guarantee access to a basic company pension.

Tom McPhail, of investments firm Hargreaves Lansdown, said the policy had helped lower earners, but ‘auto-enrolment has massively diluted the average amounts people are saving into pensions’.

He added: ‘The Government needs to find ways to bring contribution rates back up or people on higher salaries are at high risk of sleepwalking into a retirement where they cannot afford to maintain their lifestyle.’

Someone on less than £13,000 a year would need to build up a pension income of 80 per cent of that figure to be judged to be saving enough. For those earning more than £ ,000, the target is a much stiffer 0 per cent. Workers over the age of 22 have been automatically signed up to employer schemes since 2012. The Government now wants to lower the age to 18, saying this could help 900,000 young people save £800million for retirement.

David Gauke, Secretary of State for Work and Pensions, said: ‘We are committed to enabling more people to save while they are working.’

More than nine million people are enrolled in a workplace scheme, into which they and their employers contribute. Under autoenrolment savers must put away a minimum 8 per cent of their pay, made up of employer, employee and government contributions.