The Institute and Faculty of Actuaries (IFoA) has developed a rule for savers to work out the size of pension they need for their desired retirement.

According to the IFoA, people’s savings goals can be coupled with a rule of thumb that indicates whether someone is on track with their pension saving and, if not, to understand the extent of the gap so that remedial action can be taken.

This rule of thumb works by an individual subtracting 12 from their current age, multiplying it by their savings goal and then multiplying again by 12.

The outcome of this calculation would then show the desired target fund.

For example, an individual looking for a moderate level of retirement income, which the PLSA considers to be £20,200 per year, would need their total savings to be around one quarter (26 per cent) of average full time earnings, currently £799 per month.

Therefore, using the above rule of thumb, someone aged 35 who is aiming to reach a moderate retirement income, could work out that the size of fund they need is £124,644.

The IFoA stated: “The earlier an individual starts planning for their retirement, the greater the range of options available. On nearing retirement, the options available and appropriate actions will depend heavily on an individual’s particular circumstances at that time.

“In future papers, we will explore further rules of thumb to help evaluate the impact on savings goals of varying both the target retirement income and retirement age.”

According to data from HM Revenue & Customs, more people are taking control of their retirement income and are saving through workplace pension schemes.

A record 88 per cent of eligible employees saved into a workplace pension in 2019, up from 87 per cent in 2018.

This means 19.2m people were paying into a workplace scheme last year, an increase of 2.6 per cent from 18.7m individuals in 2018.

The data also showed the total amount saved in workplace pensions in 2019 was £98.4bn, up 5.7 per cent from the £93.1bn saved in 2018.

However, people may still not be saving enough as current minimum contribution rates stand at a mere 8 per cent, made up of employee and employer contributions.