Retirement planning is a crucial aspect of financial planning for everyone. One of the key components of retirement planning is building up a pension pot, which is a sum of money that can provide income during retirement. But what is the average size of a pension pot in the UK, and how does it compare to the amount required for a comfortable retirement?

According to data from the Office for National Statistics (ONS), the median pension wealth for all households in the UK in 2018/19 was £62,000. This means that half of all households in the UK had pension wealth of less than £62,000, while the other half had pension wealth of more than £62,000.

When looking at specific age groups, the ONS data shows that the median private pension wealth for those approaching retirement (aged 55-64) was £82,300. This is higher than the median pension wealth for all households, which suggests that those approaching retirement have been able to build up larger pension pots.

However, it is important to note that the median value of pension wealth can vary widely depending on a range of factors. For example, someone who has been in a well-paid job for their entire career and has been contributing to a defined benefit pension scheme may have a much larger pension pot than someone who has worked in lower-paid jobs and has only been contributing to a defined contribution scheme for a short period of time.

Gender is another factor that can affect pension wealth. Women are more likely to have lower pension pots than men due to the gender pay gap, career breaks for caring responsibilities, and lower levels of pension provision in certain industries. According to the Pensions and Lifetime Savings Association (PLSA), the average pension pot for women in the UK is around half the size of the average pension pot for men.

Occupation is also an important factor when it comes to pension wealth. People in certain industries, such as finance and law, are more likely to have access to generous defined benefit pension schemes, which can provide a higher level of retirement income than defined contribution schemes. On the other hand, people in lower-paid and more insecure jobs may have limited pension provision and may struggle to build up a sufficient pension pot.

It is worth noting that the average pension pot size can also vary widely depending on the type of pension scheme. For example, defined benefit schemes, which provide a guaranteed income in retirement, may result in a higher pension pot size than defined contribution schemes, where the pension pot size depends on the contributions made and the investment returns achieved.

In summary, the average pension pot size in the UK varies widely depending on factors such as age, gender, occupation, and pension scheme type. While the median private pension wealth for those approaching retirement was £82,300 in 2018/19, many people may have smaller pension pots than this. It is important for everyone to consider their retirement planning needs and to take steps to build up a sufficient pension pot to provide income during retirement.