Make paying into a pension like tax, says think tank The Policy Exchange study found that someone earning the average wage of £27,000 will need to save six-and-a-half times more than they currently do to generate the Government's recommended retirement income of £16,200. The average pension pot is estimated to be £36,800, which on current annuity rates would generate a retirement income of £1,340. The report warns that an average earner would need a pot of £240,000, assuming they receive the full single-tier pension, the replacement for the state pension. Dr Ros Altmann, a pensions expert and former government adviser, said: "Action must be taken to avoid increasing numbers of older people living on inadequate incomes. Ensuring that people contribute more than the auto-enrolment minimum is certainly important to deliver better pensions and using pay rises to fund higher contribution levels is the best approach. Policy Exchange also recommended a major shake-up of the annuities market to increase choice at retirement age. James Barty, from Policy Exchange, said the fact that people were not saving enough for their retirement must be addressed "sooner rather than later." With an ageing population, putting money aside for later life should be seen in the same context as National Insurance contributions, taxes and even education - an obligation that falls on everyone in society. Help to Save will prevent the state from having to pick up the tab for people who haven't put aside enough money for later life. The proportion of people aged 85 and over is projected to treble from 2 per cent to 6 per cent in the next 50 years. According to forecasts, long-term care and pensioner benefits will total about 12.4 per cent of Britain's GDP in 50 years nearly a 50 per cent increase compared to today's level of 8.4 per cent.