Warning of pension contributions shortfall may be overblown

The typical pension scheme member is only contributing 5% of pay to their pension, raising questions about whether they will have enough to retire on. Yet the situation may not be as gloomy as many people suggest.

Pension-scheme membership hit a record high last year, with some 46 million Britons enrolled in at least one workplace scheme, new official figures reveal. But, the typical pension scheme member is only contributing 5% of pay to their pension, plus their employer's contribution, raising questions about whether they will have enough to retire on.

On the one hand, the growth in pension-scheme membership under the auto-enrolment system introduced in 2012 represents a substantial success. The system requires all employers to offer staff a pension plan and pay into it on behalf of those who have not specifically opted out.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.