A pension worth less than minimum wage?

So few workers have saved enough, regularly, towards an annuity that an average person can now expect to retire on £215 per week.

For workers in company (or DB) schemes, they will receive approximately two-thirds of their salary - whereas private savers (in DC schemes) can expect to receive less than half their current income level.

Simon Fraser, president of the Retirement Institute at Fidelity International, says: "There's nothing inherently wrong with defined contribution pensions.

"In fact, DC is arguably a better solution for today's highly mobile workforce. But the move from DB to DC is often accompanied by a review of contribution levels, sometimes to the detriment of employees. It is a shocking thought that, if this is not corrected, we could see the emergence of a generation of private pension paupers."

For those struggling to juggle their finances in the light of price rises in food, fuel and utility bills, council tax and re-negotiated mortgage deals, as well as home insurance premium commitments, saving for 'the future' seems rather remote. Free debt advice from places like Citizens Advice centres may help individuals to prioritise their financial obligations.

May 30^th 2008

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