Just over half (52%) of Brits with a defined contribution (DC) pension are confident they will have a comfortable retirement, Barnett Waddingham has found.

In a survey of over 2,000 UK workers paying in a workplace DC pension, 48% said they aren’t confident about achieving a comfortable retirement.

This confidence tends to be more prevalent in younger contributors, but the firm said that confidence across age groups increased for those closer to retirement. However, a third (32%) of people set to retire within two years are not confident it will be comfortable.

Currently, just over a third of Brits have a DC pension, compared to about a quarter with a defined benefit (DB) pension.

However, with only 4% of DB pension schemes open to new members, Barnett Waddingham said that the "direction of travel is clear", estimating that within a decade, most workers will be in a DC scheme.

Partner and head of DC pensions at Barnett Waddingham, Mark Futcher, said: "In a rare glimmer of good news, people are currently more confident about retirement the closer they are to it, meaning something is going right. But there are two key areas for concern.

"Firstly, a third of people planning to retire in a couple of years are going into that period of their life without confidence that they’ll be able to live comfortably. And most people who are confident are such because of other wealth, property, or private and DB pensions. This is not much use to most young workers, who tend to have low savings, lower prospects of buying a house, and solely DC workplace schemes."

The firm also revealed that of the 52% of retirement-confident workers, most confidence is driven by having other investments, beyond their DC pot.

Over a quarter (29%) have other investments and 28% own a property outright.

However, one in five (20%) are confident because as they’ve auto-enrolled, they believe it will be enough. With the bulk of savers putting away the default 5%, the firm said that most people relying on a DC scheme alone will find themselves with a shortfall in retirement.

Futcher added: "There’s two major solutions that policymakers must pursue. The first is to improve the auto-enrolment system, by widening who it includes and increasing minimum contributions - including auto-escalation of contributions with pay rises and after career breaks. The aspiration should be to build a DC system that generates employees a comfortable retirement, without needing further wealth to survive.

"The second is to hone in on the cohort approaching retirement, and work to ensure that people are able to confidently visualise their income and lifestyle after employment, This is going to require significant innovation and a much more robust at-retirement framework, specifically working to increase confidence in older workers that a comfortable retirement is possible for them. With political upheaval likely in the months ahead, it’s critical that the industry pushes for consistency of focus - long-term pensions cannot be a short-term political football."

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