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UK savers must set aside a quarter of earnings for a good retirement

  • The State Pension and current automatic enrolment (AE) contributions will be enough to provide a minimum level of income in retirement
  • Under current AE rules, the responsibility for savings towards anything above the minimum sits with the individual
  • There will be an important role for employers and the Government to help people close the gap between a minimum and moderate level of income
  • An individual hoping to achieve a moderate level of retirement income needs to be saving around a quarter of earnings

Savers across the UK could be heading for a retirement that does not meet their hopes and expectations, with 70 per cent of savers whose workplace pension is their main form of retirement saving, only contribute the minimum into their pension [1]. New research from the Institute and Faculty of Actuaries (IFoA) shows that those expecting a moderate or comfortable income in retirement will need to save well above the automatic enrolment minimum contribution.

The report, ‘Savings Goals for Retirement’ uses ‘minimum’, ’moderate’ and ‘comfortable’ Retirement Living Standards (RLS), as defined by the Pension and Lifetime Savings Association (PLSA). Through actuarial modelling, it lays out specific monetary targets against these three levels of retirement, to help savers visualise how much money to put away now to achieve expected living standards in retirement.

Mark Williams, Chair of the IFoA’s Pensions Board said:

“Modern workplace pensions require people to take responsibility for their own retirement saving and planning, but clear and consistent information on how much they need to save can be hard to find. In our survey, almost a third of respondents said they did not know what constitutes a ‘good pension pot’.

“This IFoA research, connects the dots between actions taken now and impact on lifestyles in later life. But savers should not be left to navigate this alone. There is a shared responsibility between individuals, employers, the pensions industry and the Government to give individuals the best possible chance of having enough money in retirement, and our report provides specific recommendations for each of these groups”.

The IFoA’s modelling concludes that an individual aiming for a ‘minimum’ income retirement target should be saving £86 per month, on average, from the start of their working life. This should be covered by the contribution they and their employer have to make under automatic enrolment.

To work towards the ‘moderate’ level of income, the amount of savings required rises. To reach the full moderate income, an individual would need to save £799 a month on average over their entire working life. This represents around a quarter (26 per cent) of earnings for someone on an average full time salary. For a couple this would be £753 per month split between two individuals. People should look at the lifestyles described at each of these RLS levels to help picture their future and decide which level, or position between levels, they wish to target and how much they can afford to save.

Mark Williams, continued:

“We appreciate that these savings goals are high, and to many, they will appear daunting. But as actuaries, it is our role to ‘do the maths’ and we believe that it is in the public interest to demonstrate the potential scale of under-saving, and the impact it could have on people’s retirement prospects.

We urge the Government to assess whether the current balance between the levels of employee and employer contribution is appropriate. Individuals alone should not be burdened with the responsibility of closing what could become a significant savings gap unless there is further policy reform.”

This is one of a series of IFoA reports on the need to reframe retirement saving. Our aim is to contribute to the debate on how individuals can be better supported to prepare for retirement, and to collaborate with others to identify practicable solutions that make pension saving easier to understand.


Sonia Sequeira, Media Relations Manager, IFoA
Tel: 07525 592 198

Notes to Editor

  1. All figures referring to current saving habits, unless otherwise stated, are from YouGov Plc. Total sample size was 2266 adults, who were workers aged 16 to 65. Fieldwork was undertaken between 25th and 29th July 2019. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
  2. Savings Goals for Retirement. Institute and Faculty of Actuaries. October 2019.
  3. Retirement Living Standards, Pension and Lifetime Savings Association. October 2019.
  4. Table: IFoA Savings Goals and PLSA Retirement Standards:


Download the Table: IFoA Savings Goals and PLSA Retirement Standards as a PDF.

About the Institute and Faculty of Actuaries

The Institute and Faculty of Actuaries (IFoA) is a royal chartered, not-for-profit, professional body.

Research undertaken by the IFoA is not commercial.  As a learned society, research helps us to fulfil our royal charter requirements to further actuarial science and serve the public interest. 

Actuaries provide commercial, financial and prudential advice on the management of a business’s assets and liabilities, especially where long term management and planning are critical to the success of any business venture. They also advise individuals, and advise on social and public interest issues.

Members of the IFoA have a statutory role in the supervision of pension funds and life insurance companies. They also have a statutory role to provide actuarial opinions for managing agents at Lloyd’s of London.

Members are governed by the Institute and Faculty of Actuaries. A rigorous examination system is supported by a programme of continuing professional development and a professional code of conduct supports high standards reflecting the significant role of actuaries in society.

The IFoA is available to provide independent expert comment to the media on a range of actuarial- related issues, including enterprise risk management, finance and investment, general insurance, health and care, life assurance, mortality, and pensions.

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