Pension gap danger for those on low incomes

The average person in the DE social class hopes to retire on a pension of 16,166 a year, but they are on track to receive just 8,608, a gap of more than 7,500, according to consultancy firm Hymans Robertson.

The gap is more than twice the size of the one faced by the average worker, who hopes to receive 18,793 a year from their pension, but is projected to get 15,577.

But surprisingly, people at the top end of the income scale also face one of the biggest differences between their desired level of pension and the amount they are likely to receive, with those in the AB social class hoping for 22,111 a year but on track to receive 17,221.

Women are also facing a savings gap which is more than twice the size of the one men face, at 5,256, compared with 2,069 for men.

The group found that while 47 per cent said an individual should be primarily responsible for making their own retirement provisions, 28 per cent thought most of their retirement income should come from the state, rising to 59 per cent of people in the DE social class.

More than half of people also expected the state to look after them financially if their pension did not provide them with enough to live off.

John Wright, head of public sector pensions at Hymans Robertson, said: "The harsh reality of the present day is that many people do not realise the extent of their retirement savings gap until it is too late.

"Unless there is a decisive change in pensions policy and in attitudes to saving, many will not have an adequate income to ensure their dignity and independence in retirement."

Separate research from the Department for Work and Pensions showed that 80 per cent of 18 to 24-year-olds are failing to save into a pension.

Just 12 per cent of people in this age group were saving for their retirement.