In order to have a reasonable lifestyle in retirement, workers need to save at least 12% of their salary in to their pension, and employers should be made to contribute half of that according to a new report.
Only three percent of savers in modern pension schemes will be able to afford a comfortable retirement.
An increased focus on real life targets such as holidays and cars should be implemented in order to make the future benefits of saving more tangible.
The minimum savings rate has risen to 5% and will increase to 8% in April 2019, with half paid by the employee, with the remainder paid by the employer and tax relief.
Many people think that the minimum level of contributions will guarantee them a comfortable lifestyle which is not the case according to the report:
"The vast majority of savers do not understand retirement savings, do not know what sort of income they should aim for in retirement, and do not know how to achieve it.
Future generations of retirees are ...much less likely to have sufficient assets to generate an adequate retirement income."
At the new rate of 8% of salary, 94% of people will reach a common measure of basic living requirements (£9,998 in 2017) by the time they need to retire.
A comfortable retirement, measured as two thirds of their pre-retirement income, would only be reached by 3% of those who hold new style defined contribution pensions.
The lower levels of home ownership combined with lower pension levels and higher social care and housing costs point to a struggle for many pensioners in the future.
It's important to keep your investments and pensions under regular review in order to ensure they are being invested in line with your goals.
Your Financial Adviser can construct a financial plan for you that will enable you to meet your financial goals.
The value of investments and income from them may go down as well as up and you may not get back the original amount invested.
A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.