Two stark statements…from the World Economic Forum and one of the UK’s biggest pensions providers… have revealed the parlous state of the future pension incomes of millions of people.

Aviva, the insurer and pensions provider, has said that millions of people currently earning less than £27,500 risk facing retirement on a pension far less than £15,000 – the equivalent of today’s national living wage… because auto-enrolment contributions are still falling a long way short of the 12% they say is needed to build an adequate pension pot.

Says Alistair McQueen, head of savings and retirement at Aviva, “The auto-enrolment system has achieved its goal of getting people to save, but the eight per cent minimum may be inadequate. Millions risk disappointment at retirement.”

While pensions experts agree that people should be saving between 12 and 15% of their income, a word of caution has come from former pensions minister Steve Webb of the risk of large-scale opt-outs should contributions rise too steeply. “We need higher contributions from employers so that workers and firms are equal partners in pensions,” he said.

“Simply hiking contribution rates risks opt-outs, but there are more creative ways to get people saving more for their retirement without frightening them off completely.”

Meanwhile, a report issued by the World Economic Forum, looking globally at the future of pensions, says that pensions in the UK are likely on average to run out ten years before death, with women running out even earlier – at 12.6 years.

The cause, they say, is increasing longevity which has not been matched by increases in savings for pensions.

And while the situation looks bleak for many UK retirees, it is even worse for many Japanese because they have a significantly longer life expectancy: many Japanese women will be left for some 20 years after their savings are depleted.

The DWP has responded by urging all those entitled to pension credit to claim the benefit – more than a million who are entitled to it are currently not claiming.

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