Former pensions minister Steve Webb warns of “pensions time bomb”
The former pensions minister warned workers who make the minimum contribution into their retirement funds are sitting on a "ticking time bomb".
He said that the minimum contribution isn't enough to give retirees a decent pension, and savers must cream off more of their pay check to afford comfortable retirement.
Steve Webb, now policy director at pensions and investments group Royal London, said: "If you're faced with virtue today or virtue tomorrow, you'll always put it off, whereas if you commit today for tomorrow … you could get people up to reasonable levels with minimum opt-outs."
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Employees are currently required to contribute at least one per cent of their earnings into a workplace pension under the government's automatic enrolment scheme which kicked off in 2012, however the total figure will rise to eight per cent by 2019.
Mr Webb told the Press Association: "Out of all the issues in pensions, getting beyond eight per cent for me is absolutely way above pretty much above everything else."
"We spend so much time agonising over this detail and that rule and that small change, but the fact (we will soon) have 10m people auto-enrolled and many of them are only putting in the legal minimum is a ticking time bomb, basically."
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Pension expert Portal Financial previously warned that individual's pension expectations are soaked in a toxic cocktail of "apathy, misunderstanding, confusion and misperception."
"A person who has been retired for many years may have received a much more generous annuity rate than can be achieved today, while there is a good chance many parents of today's 20-somethings have final salary pensions," it said.
"Young workers need to understand how the situation they face is different now."