Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • October 2012
10

Auto-enrolment 'doesn't guarantee comfortable retirement'

Open-access content Thursday 4th October 2012 — updated 5.13pm, Wednesday 29th April 2020

The success of pensions auto-enrolment will depend on people understanding how much they need to save to ensure they can fund the retirement lifestyle they want, according to the Institute and Faculty of Actuaries.

2

Jane Curtis, immediate past president of the Profession, said this week’s introduction of the system, which could see up to 11 million workers automatically enrolled into a workplace pension, was a 'positive step' in efforts to encourage people to save for their retirement.

'However by effectively helping individuals to save without realising it there is the danger that they may sleepwalk into retirement without enough money in their pension pot to fund the lifestyles that they want to maintain when they leave work,' she said.

Outlining just how much of a drop in income people could see, Curtis noted that, under the National Employment Savings Trust (the default pension scheme employers can sign up to), the minimum total contribution made by employer and employee will be 8% a year by 2018.

A worker earning £20,000 a year and contributing 3% of their income over 20 years, while their employer contributes 5%, will receive a pension pot worth £47,000 in today's money.

This, Curtis explained, would amount to a tax free lump sum on retirement of £11,700 and an annual income for the rest of the worker's life of £1,600. Added to the current basic state pension of just below £6,000 a year, this would mean the worker faces a 65% reduction in their annual income when they reach retirement.

'Of course there are many factors that will affect the value of an individual's pension pot over time, but what these figures illustrate is that it is as important for each individual to be as engaged in saving for their future as it is to automatically enrol them into doing so,' she said.

'This is a communication and education challenge for both the government and employers and one where the expertise of the architects of pension products, such as actuaries, will have a key role to play.'

This article appeared in our October 2012 issue of The Actuary.
Click here to view this issue
Filed in
10
Topics
Pensions

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Catastrophe Modelling Analyst - London Market Broker

London, England
£40000 - £50000 per annum
Reference
145925

Senior Catastrophe Analyst

England, London
£65000 - £75000 per annum
Reference
145924

Life Actuary - Financial Reporting - Day Rate contract

Negotiable
Reference
145923
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ