The average earner would need to contribute over 20 per cent of salary to their pension to achieve a ‘comfortable’ retirement under Pensions UK’s Retirement Living Standards (RLS) once housing costs are factored in, according to Hymans Robertson.

Its modelling showed that someone earning £50,000 a year and contributing the minimum auto-enrolment (AE) level was unlikely to have a good chance of achieving a ‘moderate’ RLS when housing is included.

A saver earning £30,000 would need to contribute around 17 per cent of salary throughout their working life to have a greater than 50 per cent chance of having a moderate retirement standard, the modelling estimated.

Meanwhile, a comfortable retirement, as defined by the RLS, remained out of reach for many, with someone on average earnings needing to contribute more than 20 per cent of salary to have a better than 50 per cent change of achieving it.

"The updated RLS provides a helpful benchmark for understanding the kind of lifestyle pension savers may be able to achieve in retirement,” commented Hymans Robertson head of DC consulting, Kathryn Fleming.

“While everyone's circumstances are different, our modelling shows that many people will struggle to reach the higher standards without making significantly larger pension contributions than are currently required under AE.”

Fleming stated that trustees, employers and providers all have an important role to play, whether that's ensuring contributions are invested effectively, designing workplace benefits that encourage better saving habits, or providing tools and support that help members understand their options.

Hymans Robertson head of DC corporate consulting, Hannah English, added: "Housing is one of the biggest challenges facing younger generations. The RLS assume housing costs have been removed by retirement, but that will not reflect the reality for everyone.

“Many savers face difficult decisions between putting money aside for a home deposit and saving for retirement, and the long-term consequences of delaying pension saving can be substantial.

"With increasing focus on retirement adequacy, including work currently underway across the industry, and with pensions dashboards set to bring retirement savings into sharper focus.

“More people may become aware of the gap between their current savings and the retirement lifestyle they hope to achieve.

“At this point it’s highly likely that employees will turn to their current employers to understand how to ‘fix’ this. The Pensions Commission will be important to reviewing AE minimum rates, but employers have a role to play in considering the needs of their unique workforces and the ‘right’ levels for them.”

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