THE WORLD Economic Forum (WEF) predicts that by 2050, when millennials from the world’s eight largest pension markets start to retire, the retirement savings gap will be $400 trillion. It paints a worrying picture for their future, with the trend driven by longer life expectancy, poor savings rates and what the international body describes as limited financial acumen among that generation.

The WEF’s report underlines the importance of taking measures now to solve this forthcoming problem. Indeed, it’s an issue that has been recognised by the Government, which introduced auto-enrolment into workplace pension schemes in 2012.

Last month brought the start of a new financial year and the inevitable annual changes for those working in Scotland, from adjustments in income tax and amendments to student loan repayments. The majority of earners would have noticed a change to their monthly payslips and, perhaps most importantly, to their pension contributions.

The minimum contribution from salaries has now increased from 5 per cent to 8%, which should lead to employees saving a larger sum for the future. There are options available to opt down - reducing the percentage contributed – or opt out completely, for those who cannot afford to go without the extra income. The majority will likely go with the standard amount, though.

The increase is, of course, a welcome development. More money being put into pensions is always a positive in helping to prepare individuals for later life. However, while some might be tempted to think of it as a silver bullet for their retirement plans because it’s a government-backed initiative, that won’t automatically be the case.

For the majority, the change will only make a small pot slightly bigger. What it actually provides in retirement is unlikely to be sufficient on its own – there will still be a long way to go for many people. A comfortable retirement fund undoubtedly relies on doing more than the minimum required.

There’s an old adage that recommends contributing a percentage of your monthly salary equal to half your age at the time you begin saving for retirement. Someone who starts paying into a pension pot at 30 years old is advised to contribute 15% of their salary to help them enjoy a comfortable lifestyle when they stop working.

However, even this could be a dangerous rule to follow. Our recent analysis found that those who do not start saving until their 40s or 50s, could fall short when the time comes to retire. In fact, the longer you hold off contributing to your pension, the more perilous the situation becomes – unless you’re in a position to save significant amounts of your salary.

For example, someone who starts saving aged 18 contributing 9% of their wage could have up to £327,000 saved by the time they are 65. That compares to a pension pot of only £153,000 for an individual who begins saving at the age of 50, contributing 25% of their earnings.

As blindly obvious as it might seem, those who start saving as early as possible give themselves the best opportunity to save. Yet, even these numbers pale in comparison to the estimated total of £600,500 required to provide the average ‘comfortable’ retirement income of £39,773 per annum people in the UK want. This also depends on when the person was enrolled, and at what age and stage of their career – an 8% contribution is unlikely to be enough for someone who doesn’t consider saving until their late 20s.

Of course, something is better than nothing – an increase in contributions can only be a good move. Nevertheless, while auto-enrolment has undoubtedly been a positive move and has outperformed even the Government’s expectations, no one should hope an old saying or Government legislation will be enough to set them up in retirement. It’s time for savers to take responsibility and set their own rules.

Alan Harvey is a chartered financial planner at Brewin Dolphin.