Want a comfortable retirement? You'd be foolish to rely on the state. The Government all but admitted as much when they launched the new auto-enrolment scheme, insisting all companies offered their employees some form of retirement savings plan, in order to plug the pensions gap.
But critics are questioning whether the new nationwide pension scheme will be sufficient to fund our old age. The default percentage contribution under auto-enrolment for employees is 5%, and employers have to top up a further 3%.
For many workers, this will be less than their existing employer scheme - as existing pension provision matches employee contributions. For example, in the past if you saved 4% your employer also contributed 4%.
Single percentage points may not seem much now - but over time, with the effect of compound interest, smaller contributions equate to a considerable smaller pension pot.
However, there are measures that investors can implement to ensure that their retirement is spent free of money worries.
Although not compulsory, many Britons will use their pension savings to buy an annuity, which will provide an annual income for the remainder of their lives. In order to secure an annual retirement income of £50,000, you need to build up a pension pot of £833,300.
Many retirees will sell off assets - downsize their homes for example - and top up their pension savings.
Based solely on monthly contributions however, this chart shows how the earlier you start saving, the easier it is to secure a sizable savings pot.
Calculations are based on an annual fund charge of 1pc. The red bar assumes annual growth of 7%, and the green bar assumes your portfolio gains 5% a year.
Laith Khalaf, from Hargreaves Lansdown, said that aside from upping your pension contributions there are other measures investors can take to boost their retirement savings.
"Charges make a difference to your final retirement pot - but be careful here that you don’t throw the baby out with the bath water," he said. "Saving 0.5% on charges and investing in an underperforming fund which loses you 1% a year compared to its peers is a false economy."
He also recommended retirees shop around for an annuity - this one off transaction can get you an extra 40% income in retirement and it is free to exercise your open market option.
