“We can also see a pension gap opening up between those with generous defined benefit pensions and those with defined contribution pensions. Most private defined benefit pension schemes are now closed to new members, so most workers are now reliant on defined contribution pensions.”
Defined contribution pensions rely on pension savers and employers saving into a pension pot which is usually invested in the stock market. Unlike defined benefit pensions, Ms Guy said this pot fluctuates over time and the pension income a person receives isn’t guaranteed.
Ms Guy continued: “Those who are younger have more time to make up the difference and the good news is that most younger pension savers are currently on course for a comfortable retirement.”
Ms Guy said it’s important that people keep an eye on their pension to make sure that they’re on track.
She continued: “Everyone’s income needs are different and will depend on other factors like if you have housing costs, your household bills and your discretionary spending on eating out or holidays.
“If you can afford it, then consider contributing more than your employers’ standard amount to your pension scheme. Even small extra amounts add up over time and you’ll get an additional boost from the taxman.”
