Company pensions "inadequate"
28 September 2007
People are not making big enough pension contributions to secure their retirement.
According to a survey by consulting group Mercer, most company pension schemes are "inadequate".
Average contributions have risen only slightly in the past five years from 9.5 per cent of salaries to 10.4 per cent.
Saving for retirement?
This remains far below the minimum necessary for a decent individual pension fund at retirement, previously thought to be 15 per cent of salary throughout a 40-year career but now much higher due to a combination of higher costs and longer life expectancy.
Tony Pugh, the UK head of defined contribution pension services at Mercer, said: "Total contributions, while slightly up, still fall short of supporting decent pensions for the majority of people.
"At the current rate, most employees will get more pension through state benefits than their occupational plan, which may come as a surprise to many."
According to a survey by Mercer last year, 50 per cent of people expect to get a pension of more than half their pay on retirement.
However, this latest survey shows that 30 years' service with current average contributions will yield a pension worth only around 20 to 30 per cent of their salary.
