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Maximum auto-enrolment contribution “not enough”

Maximum auto-enrolment contribution “not enough”

Category: Pensions

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The maximum required contribution under the automatic enrolment scheme is not sufficient to guarantee financial security in retirement, according to the chief executive of the deVere Group.

Nigel Green has claimed that the new system, requiring employers to contribute up to 8% towards their workers' pensions, could mislead millions of people to "sleep walk into a retirement of relative poverty".

Responding to the scheme which came into to effect last Monday, Mr Green said: "8 per cent is nowhere near enough for most of today's working population to be able to maintain their current standard of living in retirement.

"The reality is that people will need to put aside a lot more than that in order to have any prospect of a financially secure retirement.

"For instance, 30-year-olds should, ideally, be saving at least 15 per cent of their earnings, and older people much more. After all, a 45-year-old who plans to retire at 65, only has 240 pay days to achieve their end objective."

"A lack of education on this matter will result in some people reaching retirement and finding their pension pots are far smaller than they had expected," he warned.

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