Are you saving enough for retirement? (And another state pension blunder) This is Money podcast
Women have already been hit by a huge state pension blunder in recent years, but now it seems the DWP is messing up again.
After This is Money’s Steve Webb and Tanya Jefferies exposed a £1billion women’s state pension scandal (which emerged from a reader question sent in to his column) you’d think the Government would be keeping on top of payments.
But it has turned out that more women appear to being told they aren’t due the right amount, or some cases as in the one we reported on this week anything at all.
On this week’s podcast, Tanya joins Georgie Frost and Simon Lambert to talk through the problems.
Also, are we saving enough for retirement? Steve sounded a warning this week that auto-enrolment was lulling people into a false sense of security and said that employers need to do more.
The team discuss what you can do to make sure you are putting enough into your pension and why the self-employed need to pay particular attention.
Plus, on this episode, the investment themes that could run for years and make you a profit and is it time for investors to weigh up buying back into Scottish Mortgage after its 40 per cent slump this year.
And finally, petrol prices are rocketing, so is it time for a VAT cut to ease the double whammy of tax?
The Pension and Lifetime Saving Association have created a report on what different types of lifestyle would cost per year in retirement. This is for an individual living alone.
How much do you need for retirement?
A useful benchmark is provided by the Pensions and Lifetime Savings Association, which has done a lot of work on retirement living standards.
It looked at the amount of money you would need in retirement for different standards of living: minimum, moderate and comfortable.
For each of these types of retirement, PLSA have then worked out how much annual income you would need, providing separate figures for singles and couples.
These are shown in the table below and for a moderate retirement, the figures are £20,800 for an individual and £30,600 for a couple. Life is seen as cheaper for a couple due to their ability to share costs.

Source: Pensions and Lifetime Savings Association
How much should you save in a pension?
Pension experts typically say that rather than contributing 8 per cent of earnings under auto enrolment, people should be putting away at least 12 per cent and possibly 15 per cent or more.
The good news is that pension tax relief, which gives a 25 per cent uplift to make up for basic rate tax for every £1 paid in, alongside employer contributions help meet these figures.
So, for example, for someone with a generous employer who will match their contributions up to a relatively high level, this would mean paying in just under 6.7 per cent of their salary.
With their employer contributing the same and basic rate tax relief adding a further 1.675 per cent, they would get to a total of 15.075 per cent.
In many cases though employers will only match contributions up to a certain level, for example 5 per cent. In this instance, a worker would need to pay in 8 per cent themself, with a further 5 per cent from their employer and 2 per cent in basic rate tax relieef.
There are also some general rules of thumb for working out what percentage of your salary needs to be going into a pension, in terms of your and your employer’s contributions.
The most common is half your age from when you started saving. This highlights the advantage of starting early, as if you start at age 20 it could be 10 per cent, at 30 it could be 15 per cent, whereas if you start at 40 it is 20 per cent.