Pension gap that's hit trillion mark

The average person needs to save 50,000 more during their working life than they currently plan to in order to obtain the pension they want, according to consultancy firm Hewitt Associates.

The group found the average worker, who was aged 43 and earned 25,000, hoped to retire at 63 on a pension worth 15,300 a year.

But they are saving only 5.9 per cent of their salary into a defined contribution pension each year in order to achieve this, meaning their pension is likely to be worth only around 5,900 annually in real terms.

Even once the state pension is factored in, people would still need to continue working until they were 70 or increase their pension contributions to more than 19 per cent of their pay to receive their desired retirement income.

The group said the gap between the pension that people hoped to receive and its projected size had soared by 50 per cent during the past six years, with Britons facing a pensions shortfall of 800bn when the same research was carried out in 2004.

Lynda Whitney, pension consultant at Hewitt Associates, said: "People need to wake up to the fact they will have to save more, work longer and/or live on a lower pension in retirement."