Pension warning as thousands risk 'sleepwalking' into chaos - Check how much you need for a 'comfortable retirement'

The concerning figures, revealed in research by Opinium on behalf of Hargreaves Lansdown, come at a time when experts calculate that individuals need £43,100 annually for a comfortable retirement.

Among those who do track their contributions, most commonly people report paying between £201 and £300 into their pension monthly, with just three per cent contributing more than £2,000 per month.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, warns: "Planning for retirement is one of the most important things you can do and yet one in five people have no idea how much they are contributing to their pension.

"If you don't know what's going in then you won't know what you are going to get out of your pension and so we risk people sleepwalking into retirement with nowhere near enough to meet their needs."

The research highlights how crucial employer contributions can be to retirement planning. Under auto-enrolment rules, employers must pay a minimum of three per cent into employee pensions, with some offering even more generous contributions.

Some employers will increase their contributions if employees raise their own - known as employer match - which can significantly boost retirement savings.

The PLSA's latest figures show that the cost of a comfortable retirement has risen significantly due to increased living costs and changing lifestyle expectations.

For a single person, achieving a "comfortable" retirement standard now requires £43,100 annually, up from £37,300 in the previous year. This level of income allows for regular beauty treatments, theatre trips, and two-week holidays in Europe annually.

For couples, the figure rises to £59,000 per year, an increase from £54,500 twelve months earlier.

The rising cost of living, including high food inflation and energy bills, has pushed these figures upward.

Alice Guy, Head of Pensions and Savings at interactive investor, explained that those aiming to retire at 55 with a comfortable standard would need "an eye-stretching £1.3million" pension pot.

With people living longer, early retirees might need to fund over 30 years in retirement.

The PLSA outlines three distinct retirement living standards, each requiring different levels of annual income.

A "minimum" retirement standard requires £14,400 annually for a single person, up from £12,800 the previous year. This basic level covers weekly groceries of around £95 for a couple, a UK holiday, and monthly dining out, but excludes running a car.

For a "moderate" retirement, single people need £31,300 annually, marking a significant £8,000 increase from the previous year.

Couples aiming for a moderate standard require £43,100 annually, up from £34,000, allowing for £100 weekly groceries, running a small second-hand car, and European holidays.

This level enables retirees to help family members with a monthly budget of £1,000 and enjoy regular meals out.

Pension contributions also benefit from Government tax relief, meaning every £100 a basic rate taxpayer pays only costs them £80, while higher rate taxpayers pay just £60.

Salary sacrifice arrangements can also help maintain pension contributions while boosting take-home pay through reduced tax and National Insurance contributions.