Huge pensions warning to anyone with less than £845k in pot | Personal Finance | Finance

A pensions industry body has warned Brits over a retirement “cliff edge” fall in income when they stop work. Residents are being urged to use new standards as a guide and to be aware of their situation to be able to understand what lifestyle they might have after retirement.

Pensions UK made the warning along with publishing updated “retirement living standards”, calculated by the Centre for Research in Social Policy at Loughborough University.

The figures show that a minimum retirement lifestyle costs about £13,900 annually for a one-person household and £22,500 for two people. Meanwhile a moderate lifestyle racks up at £32,700 for one person and £45,400 for two, while a comfortable lifestyle costs around £45,400 for one person and £62,700 for two.

These figures mean that Brits now need pension savings of £845,000 to achieve a comfortable income.

Zoe Alexander, executive director of policy and advocacy at Pensions UK, told The Times: “The latest update to the retirement living standards underlines a clear reality for many people – today’s saving levels will not be enough for the retirement they expect.

She added: “Without action, too many risk facing a cliff edge drop in income when they stop work.

“We also encourage people to speak to their employer and see whether the organisation is prepared to support them to save above the minimum, such as higher rates of matching pension contributions.”

Pensions UK says it expects that about 82% of the working population in the UK will reach the minimum level, while only 23% will reach a moderate standard and only 9% to achieve a comfortable lifestyle.

The organisation added that housing costs are not included within the retirement living standards, meaning calculations will greatly differ across different personal circumstances and geographical location.

Jamie Jenkins, director of policy at Royal London, said: “Although many are on track for a minimum standard, overall financial resilience in retirement is still a long way off.

“Encouraging people to start saving earlier and saving more could make a significant difference.”