The average worker is on course to miss their annual retirement income target by approximately £12,000, research by Royal London has revealed

The research revealed that the average pension saver hopes to retire on an annual income of £48,868, including the full state pension, which is currently £11,542.

However, a 22-year-old with a starting salary of £24,000, making the minimum 8 per cent of pension contributions (from the employer and the employee), receiving a 2.5 per cent annual pay rise and annual compounded investment growth of 5 per cent after fees, would leave the workforce at age 67 with a pension pot of around £468,000, if they had been paying in since day one of their employment.

Including the state pension, this would provide the saver with an annual retirement income of approximately £36,600 – £12,200 short of the desired £48,868.

Given this, Royal London emphasised that employers have a “key” role to play in helping their workforce get a better sense of what they need to do to achieve the retirement income that they aspire to.

Royal London, workplace pension director, Rory Marsh, said: “This latest research shows that, despite the majority of employees being enrolled in a workplace pension, the reality of what those savings add up to does not meet the kind of income many of us aspire to in retirement.

“We’ve got more to do as an industry to help savers change that retirement reality.”

In response to this, the company launched a range of tools to help employees enhance their long-term financial resilience, designed to help employees determine their pension contributions, identify retirement income and lifestyle goals, and pinpoint support needed for later life.

Marsh said that through these resources, employees will be “better equipped” to plan for their ideal future, ensuring a more secure and fulfilling retirement.

The tools, which include a pension contribution tool, a retirement income and lifestyle planner and later life guidance services, are available through Royal London’s free financial well-being service.

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