Nearly three quarters (74 per cent) of UK defined contribution (DC) pension savers feel like they are not on track to achieve a reasonable standard of living in retirement, a survey from BlackRock has found.

The research revealed that confidence was at its lowest point since BlackRock began surveying UK DC savers in 2017, as 52 per cent of participants said the cost-of-living crisis was the top of their minds.

Despite 80 per cent of participants viewing pensions as the most effective way to save for retirement, less than half (45 per cent) of UK DC savers think they are contributing enough.

Commenting on the findings, BlackRock head of UK and Ireland institutional client business, Gavin Lewis, said: “As the first generation to save primarily through DC pension schemes approaches retirement, we found that many feel they are not on track to attain a reasonable standard of living in retirement (29 per cent).

"The next generation shares similar feelings, with 38 per cent concerned they won’t have enough to live the life they want, and 61 per cent concerned about outliving what they have built up.

“This sentiment demonstrates the need for an increase in individual pensions contributions and broader pensions innovation, such as target date funds or collective defined contribution (CDC) schemes, both of which pay an income in retirement.

“In fact, 52 per cent of those surveyed ranked the certainty of an income as their highest preference for a pension.”

In addition to this, three quarters (76 per cent) said they would value the flexibility and discipline of automated ‘rainy day’ savings solutions, such as Nest Insight’s ‘sidecar’ concept.

Indeed, Lewis highlighted the research by Nest Insight as demonstration of “the power of payroll savings” in helping people build long and short-term financial security, suggesting that this could be particularly valuable for those just starting on their retirement journey.

“While pre-retirees are more concerned about their retirement future, the younger generations also need help to save now,” Lewis said.

“With a large proportion of both Gen Z and Millennials having fewer than three months’ savings on which to fall back, building an emergency savings element into auto-enrolment is a ‘win-win’ in this context.”

According to the research, retirement readiness ranked bottom of financial concerns (10 out of 10) for Millennials and was very low on Gen Z’s list (9 out of 10), despite 44 per cent believing the state pension will not be sufficient by the time they retire.

Indeed, the majority (57 per cent) of Gen Z participants expressed a desire to enjoy life now rather than worry about planning for the future, while 70 per cent of Millennials felt unable to plan for the future due to current financial pressures.

The survey also found that younger people said they would benefit from education on the power of compounding, the benefits of automating processes, and using technology to increase savings in the short, medium, and long term.

BlackRock suggested that this was "particularly relevant" given that 22 per cent of Gen Z participants felt that a scheme’s number one priority should be little or no member engagement.

In addition to this, 71 per cent of pre-retirees expressed interest in further education on the retirement income options available.

Meanwhile, 87 per cent of Gen X and pre-retirees believed DC plan providers should offer guidance for investing pension savings up to and after retirement.

The survey found that those approaching retirement are seeking straightforward information on how much savings they will have and the best ways to manage it, with three quarters (75 per cent) of pre-retirees saying they would value help calculating the income they will need in retirement.

Furthermore, 11 per cent said they had a clear understanding of their income-generating options, leaving most feeling uncertain about their choices when they retire.

Over three-quarters (76 per cent) of pre-retirees do not have a plan for moving their money out of their workplace pension at retirement.

Meanwhile, 65 per cent of pre-retirees said they were concerned about creating a sustainable retirement income, with 61 per cent worrying they may outlive their savings.

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