Auto-enrolment warning

Pension pig

Workers will need to pay in more than 40 years' worth of auto-enrolment contributions in order to be "financially comfortable", research from independent financial advisers Chase de Vere has found.

Introduced in October 2012, auto-enrolment requires employers to automatically enrol workers into a workplace pension scheme as long as they earn more than £9,440 in an effort to get people saving of their retirement.

The National Employment Savings Trust (Nest) has found that retirees need an income of around £15,000 or more to feel comfortable, with half of this amount coming from state benefits.

But number-crunching by Chase De Vere has found that if you rely just on minimum auto-enrolment contributions then people will have to invest for more than 40 years to hit the £15,000 target.

It found that if you were to pay in the minimum contribution for 40 years your retirement income would be £15,310.50, meaning your monthly income would be £568.66. If you were to do this but for just 30 years, your retirement income would be £7,506.26 with £341.21 as your monthly income.

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Patrick Connolly, financial planner with Chase de Vere, urged people to start planning for their retirement as soon as possible.

"We are huge supporters of pensions auto enrolment, believing it should be the foundation for many people's retirement planning," he said.

"However, for most people auto enrolment alone won't be enough to provide a comfortable standard of living in retirement. For many people these numbers will be depressing but it still remains better to do something rather than nothing at all and so we strongly encourage most employees to join their company pension scheme

"While auto enrolment can provide a foundation for people's retirement planning, at minimum contribution levels it is unlikely to give them the standard of living they would want in retirement.

"Those who want to ensure a better standard of living need to start saving as soon as possible, invest more and review their investments regularly."

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