IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

What level of pension contribution is needed to obtain an adequate retirement income?

Listed author(s):
  • Daniel Redwood
  • Leandro N. Carrera
  • John Armstrong
  • Teemu Pennanen
Registered author(s):

    Under automatic enrolment, employers are required to automatically enrol their employees into a qualifying pension scheme. The minimum total contribution rate is 8% of a band of earnings from £5,668 and £41,450 per annum, of which a minimum 3% must come from the employer. With over 80% of Defined Benefit (DB) schemes now closed to new members or future accruals the majority of employers are expected to select a Defined Contribution (DC) pension as their qualifying scheme. This report analyses what ranges of retirement incomes from a DC pension different individuals might achieve by making only the minimum required level of contributions. The report also analyses the contribution rate necessary for different individuals to have a “good chance” of achieving an adequate retirement income. This report employs outputs from the PPI Individual Model adapted to use stochastic modelling techniques, based on a model developed by the Department of Mathematics at King’s College London. Each individual modelled is run 100,000 times with different economic scenarios. This illustrates better the variability around investment returns and economic variables year on year.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    File Function: Open access version.
    Download Restriction: no

    Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 54233.

    in new window

    Length: 57 pages
    Date of creation: Oct 2013
    Handle: RePEc:ehl:lserod:54233
    Contact details of provider: Postal:
    LSE Library Portugal Street London, WC2A 2HD, U.K.

    Phone: +44 (020) 7405 7686
    Web page:

    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    in new window

    1. John F. Cogan & Olivia S. Mitchell, 2003. "Perspectives from the President's Commission on Social Security Reform," Journal of Economic Perspectives, American Economic Association, vol. 17(2), pages 149-172, Spring.
    2. Shlomo Benartzi & Richard Thaler, 2004. "Save more tomorrow: Using behavioral economics to increase employee saving," Natural Field Experiments 00337, The Field Experiments Website.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:54233. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (LSERO Manager)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.