Many employees are now in inferior defined-contribution schemes into which their employers contribute an average 6.5 per cent of each member's annual salary.
But unless you benefit from top-class investment performance, that 6.5 per cent is unlikely to get you to the two-thirds final salary that most of us desire as a retirement income.
Research by Fidelity International reveals that a 25-year-old employee on the average salary of £26,020, needs to find an extra 8 per cent of salary above the 6.5 per cent employer contribution to retire on two thirds' of final salary.
Adding in extra money into a pension is straightforward. Known as additional voluntary contributions, they are arranged through your employer's payroll.
It's best to work out exactly what you are aiming for in advance and there are plenty of free tools on the internet that allow you to do this.
For example, you can place your contribution rates into Fidelity's 'myplan' pension pot modelling tool, a version of which is freely available at www.fidelitypensions.co.uk. This shows that a 40-year-old earning £50,000 with savings of £80,000 and saving £500 a month could retire on £39,000 at age 65 if the market performs on average.
