The UK pension system is complex and take-up is often low, resulting in a very real risk that a large majority of the population face retirement with wholly inadequate levels of savings.

With people now living longer, saving for later life is more important than ever. It is estimated that babies born in 2013 are expected to live to 100 and 8% of men and 14% of women age 65 today will live to be 100.

The reality is most people vastly underestimate how much they need and put too much faith in state provision. In 2016, a single state pension will be introduced and provide around  £151.25 a week – as long as full national insurance contributions (35 years) have been made. In the face of this, many people, especially women, will face a significant shortfall.

Even with full national insurance contributions in place, the amount provided is inadequate to fund a comfortable retirement. This should force people to rethink how they will pay for their old age needs and meet retirement goals.

Workplace pensions have started to gain popularity and penetration since auto-enrolment was introduced in October 2012. This legislation has seen millions of people starting to save for the first time, with around 5.2 million people placed in a pension scheme by their employer. Millions more are expected to join by 2018 when the auto-enrolment rollout is complete. The government anticipates around nine million in total will be newly saving or saving more by then.

Currently, anyone earning over £10,000 and aged over 22 must be automatically enrolled – unfortunately, this means an estimated 3.5 million people will miss out and will be forced to think about a pension on their own accord.

Although active membership of occupational pensions increased by over two million, driven primarily by auto enrolment, average contributions have halved due the low mandated minimums currently in place.

Average contributions to defined contribution (DC) schemes slipped from 9.1% of earnings in 2013 to just 4.7% in 2014, according to figures from the Office of National Statistics, as 32,000 mainly medium-sized employers introduced their employees to the world of pensions saving.

Mandated minimum rates for auto-enrolment will rise in phase to a high of 8% in 2018, however education is still required so that individuals fully appreciate that just saving into a pension is not enough – the levels of contribution need to be adequate as well.

Meanwhile, suitability of contributions and drawdowns have been in focus following the introduction of the new pension freedom rules which came into force in April 2015. Under the new rules, savers over age 55 can withdraw all their pension pot in a lump sum.

Although there are tax implications for people who raid their pension pot early, many will need advice to avoid severe financial mistakes and avoid running the risk of destitution in later years.

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