Today marks State Pension survival day
The average UK full-time employee has earned £8,546.20 in the last five months (excluding bank holidays and weekends). Over the 101 working days up to today, this is the amount that a retiree relying on the State Pension receives for the whole year.
In contrast, the average UK worker receives a salary of £513 per week, or £26,676 per year. This means they are left with £21,419.36 per year to live on after tax – 2.5 times more than the State Pension.
The research by Aviva comes as nearly one in five people (17%) think the State Pension will be their main source of income in retirement.
As such, the findings reveal the potential gap in income facing those with no other financial sources in retirement as they will need to fund the remaining 220 days of the year until 31 December 2018.
However, the general insurer and asset management firm said auto-enrolment is helping to bridge some of the savings gap as more than nine million people are now saving for their retirement.
In April, the total minimum contribution rose to 5% of earnings – with the minimum contribution increasing to 2% for employers and 3% for employees. The total will rise again to 8% in April 2019 – with the minimum contribution increasing to 3% for employers and 5% for employees.
But for the self-employed, just one in seven saved into a pension in 2016, according to the latest figures from the Department for Work and Pensions.
‘Put saving first’
Alistair McQueen, head of savings and retirement at Aviva, said: “How many of us could survive until 31 December with the amount of money we have already earned this year – or live for a whole year on just £8,546?
“The State Pension is a national treasure and the bedrock of many retirement plans. However, most of us will find that it isn’t enough to meet all our financial needs in retirement.
“Auto-enrolment has helped the UK take a step forwards to saving more via workplace pensions, but the threat of financial struggles in retirement hasn’t gone away, especially for the self-employed.
“Saving more into a pension means having to make the rest of the monthly pay cheque stretch further, but a far tougher challenge will come when you’re no longer earning and have a much bigger income drop to deal with.
“We urge people to think of the future and play the long game by putting saving first.”