An individual hoping to achieve a moderate level of retirement income will need to save around a quarter of their earnings each month, according to the Institute and Faculty of Actuaries (IFoA).

Using the Pension and Lifetime Savings Association’s definiton of a moderate level of income, which amounts to an annual income of £20,200 for individuals and £29,100 for couples, the IFoA has calculated that an individual would need to save £799 a month over their entire working life. This represents around a quarter of earnings for someone on an average full time salary. For a couple, monthly savings would have to be at £753 per month, split between two individuals.

The saving levels are well above the minimum contributions currently stipulated by the automatic enrolment regime.

The IFoA’s modelling estimates that employer and employee contributions should, however, be enough to allow an individual to aim for a minimum income retirement target of £10,200 a year, by saving £86 per month, on average, from the start of their working life.

IFoA’s pensions board chair Mark Williams, said that the institute appreciated that the saving goals for a moderate income would appear “daunting”.

“But as actuaries, it is our role to ‘do the maths’ and we believe that it is in the public interest to demonstrate the potential scale of under-saving, and the impact it could have on people’s retirement prospects,” he said.

"We urge the government to assess whether the current balance between the levels of employee and employer contribution is appropriate. Individuals alone should not be burdened with the responsibility of closing what could become a significant savings gap unless there is further policy reform.”

The IfoA’s calculations have been included in a report called Savings Goals for Retirement, which also contains results from a survey carried out by YouGov of 2266 workers aged between 16 and 65. This research found that almost a third of respondents do not know what constitutes a “good pension pot”.

Williams added that this showed savers should not be left to navigate retirement saving alone, arguing that there is a shared responsibility between individuals, employers, the pensions industry and the government to give individuals the” best possible chance” of having enough money in retirement.

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