The average proportion of income saved into a pension is just 3%; with over half (52%) of women and 39% of men surveyed saying they are saving nothing at all for their retirement, while only 6% save more than one-tenth of their income, research from J.P. Morgan Asset Management (JPMAM) has found.

However the online survey of over 2,000 UK adults revealed that two-thirds (64%) expect to use a pension for income in retirement.

The survey found that a proportion expect to their retirement income to come from other areas. Almost half (47%) are counting on state benefits; one-quarter say they will work part-time; one-in-five (21%) expect to use other investments; 14% apiece will rely on inheritance or downsizing their home; while one in 20 (5%) will depend on equity release.

Furthermore, when asked what level of pension income they expect to receive in retirement, more than half (53%) say less than 40% of their final pre-retirement salary. The average pension income people are expecting to receive is 37% – which on the national average salary of £26,500 per annum would give a pension income of £9,805 a year in today’s money.

However, few are aware of how much is needed to generate a pension income of £25,000 a year. 63% of UK adults said they didn’t know, rising to 66% among those aged 55 or older. On average, people believe that in order to generate an income of £25,000 per annum they need £380,061. The sum is higher among those who are 55 or older, with a mean answer of £476,550, compared with £289,216 for those who are aged 18-34.

But at current annuity rates, a 65-year-old with no health problems would need a fund of around £500,000 to secure an annuity of £25,000.

Large disparities were identified in how men and women approach retirement saving, with 71% of men expecting to use a pension as their income compared with 58% of women. A higher percentage of women, 22% rely on their spouse/partner to support them compared with 15% of men.

Overall, the level of pension income that men and women expect to receive in retirement differs. Men believe they will receive 40% of their final salary as a retirement income compared with 34% for women.

JPMAM head of UK funds marketing Keith Evins said: “If ever the nation needed a wake-up call to start planning and saving for their long-term financial future and retirement then this is it. Worryingly, every second person is saving absolutely nothing for their retirement, yet on average people are expecting to retire on 37% of their final pre-retirement salary. Sadly, the numbers just don't add up.”

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