New data shows just how little money there is in the average workplace Defined Contribution pension scheme at retirement.
The average value of assets in workplace Defined Contribution pension schemes is £5,500 (January 2020) down from £7,865 the year before.
The low levels of savings in these schemes highlights the importance of individuals supplementing their workplace pensions with their own private pension savings. Individuals may also want to consider making additional investments to help boost their retirement income.
Most Defined Contribution workplace pensions are auto-enrolment schemes, where employers often contribute the minimum 3% of an employee’s salary.
Although auto-enrolment pension schemes help to ensure people are regularly putting money towards their retirement, it can mean that as people change jobs, they end up with multiple pension pots with smaller amounts.
Savers that find themselves with various pension pots may want to consider consolidating these pots. However, it is critical that this is done with caution and that they seek professional advice beforehand.
Individuals risk losing out on certain benefits if all of their pension pots are consolidated, including life cover and guaranteed minimum level of income offered by some pension providers, as well as the possibility of making tax free withdrawals greater than 25%.
In order for savers to achieve the retirement they deserve, it is essential that they take into account financial planning. Long-term planning is key in helping individuals achieve their financial goals.
Read more from us in FTAdviser and Pensions Age: