However, when looking at how much is in them, the average value of defined contribution pensions has plunged from £17,206 to £5,846, a fall of 66% since 2012.
Here, Which? delves into the reasons why the value has fallen and why it's nothing to worry about; plus, we offer five tips to keep your retirement savings on track.
Why has the average value fallen?
However, it is an increase since the start of 2020, when levels dipped as low as £3,938.
Here's how average asset values per pension scheme membership have changed since 2012.
Should you be worried?
In short, no.
A spokesman added: ’This influx of new savers, combined with the retirement of defined contribution members who had been saving for longer and so built larger pots, initially caused average assets per member to decrease with some years seeing significant falls.
‘However, this trend stabilised and since 2020 average assets per member have risen every year.’
Helen Morrissey, head of retirement analysis at investment firm Hargreaves Lansdown, said it’s also likely that members have more than one pension, and if their total pension wealth were added up, it would be higher.
She added: 'However, there’s also the risk that when expanding their pension schemes to more people, employers have made them decidedly less generous, so fewer people have nothing, but more of those who are saving aren’t doing enough to secure a decent retirement income.'
Find out more:Should employers pay more?
Your employer must put at least 8% of your earnings into your pension pot by law. Your employer must contribute at least 3% of that amount, with the other 5% coming from you.
However, many employers pay more than the minimum 3%, and some may even match your own contributions if you decide to increase them.
To find out your employer's pension contributions, you should be able to see this on your annual pension statement if you were signed up for automatic enrolment.
Last April, the Living Wage Foundation launched a Living Pensions standard recommending employers meet a savings target of 12% of a workers salary, of which the employer would pay at least 7%. Currently, over 30 employers have voluntarily signed up to it.
Find out more:5 ways to keep retirement savings on track
Here are some ways you can keep stock of your pension pots.
1. Find out how much you need to retire
To help figure out how much you need in retirement, we've spoken to thousands of retired Which? members, both those living alone and couples, to see where their money is being spent.
We found that in 2023, households with two people needed an income of at least £19,000 for essentials, including food, drink, housing, transport, and utilities. A single person would need £13,000.
For a comfortable retirement, which includes all of the above, plus regular short-haul holidays, recreation, leisure, alcohol, tobacco, charitable donations and gifts to family and friends, a two-person household would need £28,000. A single person would need £20,000.
Find out more:2. Learn about your own pensions
According to a survey by Hargreaves Lansdown, two in five people don’t know where their pensions are held or are unsure.
If you haven’t a clue, the best place to start would be to write down a list of all the places you have worked.
You should search for correspondence you may have been sent. Employers are required to provide details of their pension scheme within six weeks of you starting work, so look back for postal correspondence or emails from that time.
Direct contribution schemes are legally required to send you annual statements every year.
The government’s pension tracing service searches a national database of more than 200,000 workplace and personal pension schemes to find the contact details you need. It's free to use.
You can search online or call on 0800 731 0193. It won't tell you whether you have a pension or what value it is, and you'll need the name of an employer or pension provider to use the service.
Find out more3. Track down lost pots
You may have pension pots built up while working for previous employers that you’ve forgotten about.
Research organisation the Pension Policy Institute estimates that 2.8m pension pots are lost in the UK, worth a total of £26.6bn – making the typical lost pension pot worth around £9,500.
For now, many private providers have their own tools you can use. For example, recently, Aviva launched a new free Find and Combine service that can locate these lost pensions and tell you any charges you may incur or valuable benefits you could lose if you decide to consolidate them.
There are also free tools available from AJ Bell, Gretel and The Pensions Tracing Service.
Find out more:4. Consider consolidation
If you find it hard to keep track of all your pension pots, it might be worth consolidating them.
Transferring your pensions not only reduces admin but can also reduce the charges you pay.
However, deciding whether to combine all your pension pots isn’t a straightforward decision, as there are clear advantages and disadvantages.
If you’re uncertain about what to do, consult with a regulated financial adviser.
Find out more:5. Review contribution levels
If you stopped contributions during the cost-of-living crisis, it might be a good time to review your pension.
According to a survey by Hargreaves Lansdown, 17% of people had cut their contributions in the past six months - down from 22% who did the same thing last year.
Meanwhile, 7% have boosted their contributions in the past six months, and a further 2% have hiked contributions after previously cutting back.
It’s a good idea to regularly review how much of your salary you are contributing, and if you could afford to increase this.
For example, you could bump up the amount you put in if you've recently had a pay rise or simply pay in a lump sum when you can.
Find out moreundefinedsource https://www.which.co.uk/news/article/average-workplace-pension-value-falls-66-since-2012-should-you-be-worried-aTMuy0x8RsRo