Are you putting enough into your pension?

Britain's state pension is miserly. And given the state of public finances, it's unlikely to get any more generous. So you need to make sure you're saving enough to give you a fighting chance of a decent retirement, says Tim Bennett.

The economy may have shown the odd sign of life recently, but the news on pensions remains bleak. This week we learned that Britain offers the most miserly state pension £95.25 a week for an individual and £152.30 for a couple of 17 OECD countries, the Office of National Statistics reported. And given the urgent need to make spending cuts to address Britain's woeful public finances, there's no guarantee future pensioners will get even that.

The UK's debt problems also mean that state employees shouldn't get too comfortable about their pensions. If you use "proper financial methods" to calculate it, says the Policy Exchange think thank, the "unfunded" obligation (meaning the Treasury has not set aside any specific funds) on taxpayers to pay for these pensions is around £1.1trn well above the national debt. This is simply unaffordable, and many believe that a change in conditions is a matter of when, rather than if.

But state employees are still better off than most in the private sector. A full 81% of firms questioned by accountants PricewaterhouseCoopers have already shut their 'defined benefit' pension schemes (whereby you know exactly what you'll get on retirement) to new members. Barclays became the latest big UK firm to freeze its scheme benefits even for existing members earlier this month. That means more and more people will have to make their own pension arrangements.

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This is where the numbers get scary. Private-sector staff can save for a pension via defined contributions, or 'money purchase'. They chip in a fixed part of their salary to a fund, as does their employer, and on retirement whatever has been accumulated is available to buy an annual income, or annuity.

But you need to start early. A survey by Aegon showed that 71% of people would like to retire on at least £15,000 a year. But if you're male, start aged 40 and plan to retire at 65, Hargreaves Lansdown's pensions calculator shows you need to put away £750 a month, and that assumes investment growth of 6% after charges. For a pension of £40,000 a year, the monthly contribution rises to £2,000.

On the flipside, you may need less income than you think. Once you retire, you'll hopefully be mortgage-free, and daily spending on work expenses, such as commuting, will go too. This will significantly boost your net after-tax income. You also enjoy a higher tax-free personal allowance for 2009/2010 it's £9,490, as long as your retirement income does not exceed £22,900. Nethertheless, the saving challenge is still formidable - The best ways to save for retirement.

Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.