George Osborne must simplify the pensions system if he wants to get more people saving, according to PricewaterhouseCoopers (PwC). The consultancy firm also called on the chancellor to use "language people can relate to" and go beyond his tax reforms in a bid to fuel investment in retirement funds.
"It is clear that many people's expectations of their pension pot and the reality at retirement will be very different as people simply aren't contributing enough to their pensions," said Raj Mody, head of pensions consulting at PwC.
"Any system that is asking people to lock up their money for many years needs to be simple to understand, trusted and sustainable to encourage greater savings levels. It also needs to include a strong up-front incentive."
The comments coincide with the company's most recent research into the issue which discovered a 22-year-old could be left with a mere £4,000 ($6,076) per year if they did not start saving a substantial sum (15%) of their total income.
PwC, who commissioned Opinium to question 1,197 respondents between 31 July and 3 August, found almost six in 10 (59%) people are put off from saving into pensions because of their lack of knowledge of the investment vehicles.
The survey also revealed that, on average, workers would like to retire on an income of more than £22,000 per year. However, because of their low contribution levels, most people will miss out on the desired pension amount since, on average, the respondents invested only 5% of their salary into their retirement pot.
The figures come after Osborne's raft of pension legislation, which has made it easier for people to access and withdraw money from their retirement funds. The Financial Conduct Authority revealed earlier in September that more than 200,000 people had dipped into or emptied their pension pots since April, when the new laws came into force.
The Department for Work and Pensions and the Treasury had not responded to a request for comment from IBTimes UK at the time of publication.