The average British worker with a pension plan needs to save an extra £50,000 to ensure a comfortable retirement, according to market analyst Datamonitor's latest report.
The figures reveal that if workers fail to save this extra £50,000, the average shortfall in their retirement income will be £4,000 a year. The extra sum of £50,000 would equate to the average individual getting two-thirds of their working salary once they are retired.
UK workers have an average of £30,000 per person in their private pension funds. Without additional contributions, the average UK worker would have retirement income of £13,000 a year from a combination of state pension and private pension savings.
Despite this deficit, Datamonitor says the UK still has the biggest pensions savings market in Europe, with the most saved per head of population in a pension.
In 2003, UK private pension funds were estimated at a total of around £1,298bn, dwarfing the next biggest market in Europe, the Netherlands, which has £342bn held in private pension funds.
In countries such as Italy, France and Spain, individuals often make no contribution to their pension schemes but can benefit from up to 80 per cent of their working salaries in retirement.
Datamonitor life and pensions analyst Oliver Guirdham says initiatives to promote more saving such as stakeholder schemes, have so far failed and the UK Government has exacerbated the problem by removing tax credits from pension schemes, a change estimated to reduce pension savings by £5bn a year.
Guirdham says: “We are talking about the funds that people will need on the day that they retire, so for many people there is still time to adjust. UK citizens have built up relatively large private pension savings relative to many European countries but there is still the need for more and the Government needs to help them do this.”