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Auto-enrol pensions - do the figures add up for you?

More than half a million people will be saving for a pension for the first time by Christmas, the Government says. Photo: PA

What is behind the political spin and sales hype of 'the biggest pension boost in 100 years'?

Bring it down to hard cash - and the "boost" may not look quite so big.

I asked the pensions experts at NEST (National Employment Savings Trust) to give me some projections.

They are the people who will be the main suppliers of retirement plans under the scheme - they know their stuff.

Workers from age 22 with earnings above £8,000 will automatically be signed up if they have no workplace pension.

It is then up to them to opt out, if they so choose.

Take a look at the estimates I got. They are interesting...and perhaps worrying.

Four decades of pension potential:

  • A 22-year-old earning around £15,036, retiring at 68, would expect a final pot size of £148,000.

Their cash lump sum could be £37,000, combined with annual retirement income which could be £6,090.

This would be on top of their state pension (currently £5,587.40 pa)

  • A 30-year-old earning £15,036, retiring at 68, gets an estimated final pot of £78,300.

So a cash lump sum could be £19,500 combined with annual retirement income which could be £3,270.

  • A 40-year-old earning with £15,036 income, retiring at 67, can expect a final pot of £45,600.

This makes a cash lump sum of £11,400 combined with annual retirement income of £1,910.

  • A 50-year-old with £15,036 earnings, retiring at 67, builds a pot of £23,100.

A retirement cash lump sum could be £5,770 combined with annual retirement income which could be £990.

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