UK savers need extra £23bn a year to hit 12% pension target, says Bowmore

New probe from Bowmore Financial Planning, portion of Bowmore Wealth Group, has indicated that UK savers are falling abbreviated of recommended pension contributions.

Bowmore’s investigation of HMRC information for 2022–23 suggests savers would request to lend 12% of their yearly wage to conscionable guidance from Pensions UK.

However, the institution estimates that reaching this level would necessitate astir £23bn successful further pension contributions each year.

Bowmore Wealth Group’s reappraisal of HMRC information connected incomes and pension contributions shows that backstage assemblage workers are putting an mean of 3.63% of their wage each twelvemonth into a backstage pension.

This means that, retired of the £38.7bn that should beryllium saved each twelvemonth nether Pensions UK guidance, lone £16bn is really being enactment into pensions.

The institution points to weaknesses successful the auto-enrolment model arsenic 1 origin down debased publication levels.

It notes that self-employed workers are not automatically enrolled into pensions and often divert wealth into gathering their businesses alternatively of status saving.

Bowmore besides highlights that galore businesses cipher auto-enrolment contributions lone connected net betwixt £6,240 and £50,270.

This means galore higher earners are not contributing capable to their pensions. Workers nether the property of 22 are besides excluded from auto-enrolment altogether.

Pensions UK, the commercialized assemblage for pension schemes, has said that raising mean pension publication rates to 12% would present an mean status income of £31,300 per twelvemonth for UK taxpayers.

Bowmore Financial Planning managing manager Gill Millen said: “The immense gulf betwixt what Pensions UK is recommending radical prevention and what they are redeeming is alarming.

“Our information shows that adjacent successful their 40s and 50s, erstwhile galore person paid disconnected overmuch of their mortgage, radical are inactive contributing lone 3.3–4.3% of their wage into their pension. With status costs spiralling, it is much important than ever to person a steadfast pension pot. Setting speech wealth present volition beryllium pugnacious for galore savers.”

"UK savers request other £23bn a twelvemonth to deed 12% pension target, says Bowmore" was primitively created and published by The Accountant, a GlobalData owned brand.

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