"How many of us could survive until 31st December with the amount of money we have already earned this year – or live for a whole year on just £8,546?"
The current full state pension gives retirees an income from the government of £8,546.20 per year. In contrast, an average salary of £513 per week, or £26,676 per year, gives the average UK full-time worker £21,419.36 per year to live on after tax – 2.5 times more than the state pension.
The comparison shows that after the first 101 working days of 2018, excluding Bank Holidays and weekends, the average UK full-time employee has already been paid the equivalent of a full year’s state pension allowance.
Aviva’s research has also found that nearly one in five (17%) working adults believe the state pension will be their main source of retirement income.
For those employees saving into a workplace pension, auto-enrolment is helping to bridge some of the savings gap, with more than 9 million people having been introduced to pension saving since the government policy was rolled out in 2012.
However the situation differs for those who are self-employed with currently no auto-enrolment equivalent in place. Latest figures from the Department for Work and Pensions suggest that only 1 in 7 self-employed workers saved into a pension in 2016 – increasing the risk of a lack of income outside of the State pension in retirement.
Alistair McQueen, head of savings and retirement at Aviva, commented: “How many of us could survive until 31st December with the amount of money we have already earned this year – or live for a whole year on just £8,546?
“The state pension is a national treasure and the bedrock of many retirement plans. However, most of us will find that it isn’t enough to meet all our financial needs in retirement.
“Auto-enrolment has helped the UK take a step forwards to saving more via workplace pensions, but the threat of financial struggles in retirement hasn’t gone away, especially for the self-employed.
“Saving more into a pension means having to make the rest of the monthly pay cheque stretch further, but a far tougher challenge will come when you’re no longer earning and have a much bigger income drop to deal with.
“The state pension can only replace the average worker’s income for 101 working days a year. Thanks to employer contributions and tax relief, more money goes into your workplace pension each month than comes out of your salary, so we urge people to think of the future and play the long game by putting saving first.”
