Savers can boost pensions by £52,000 with one move | Personal Finance | Finance
Brits can boost their pension pots by up to £52,000 (Image: Getty)
Retirement experts are urging Brits to review their pension payments, as a marginal increase could boost savings pots by thousands of pounds. Standard Life, a retirement specialist focused on retirement savings, found that employees could build a retirement pot of around £262,000 over their working lives if they pay 2% above the automatic contributions.
According to its calculations, if someone pays the minimum auto‑enrolment contributions of 5% employee and 3% employer since the start of their career at 22 on a salary of £25,000, they could build around £210,000 by the age of 68, in today’s prices. However, increasing employee contributions by just 2% from the outset could see that pot grow to around £262,000, around £52,000 more over the course of a working life.
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Mike Ambery, retirement savings director at Standard Life, urged Brits to reevaluate their pensions so they don’t miss out on extra money available from their employer.
“Make sure you’re paying enough into your workplace pension to receive the full employer contribution available to you, if it’s affordable.
“Many employers will match what you pay in up to a certain level, so if you’re contributing less than that, you could be missing out.
“If your circumstances allow, even modest increases to regular contributions can make a meaningful difference over time – particularly when they’re made early and kept up consistently.”
Research from Standard Life found that almost half (47%) of UK adults believed their retirement outcomes were largely influenced by factors outside their control.
For some, this feeling of uncertainty can make it harder to prioritise long‑term saving, with nearly three in 10 (29%) saying they have done little or no planning for retirement.
However, for those able to consider long-term planning, Mr Ambery said even small changes can make a significant difference.
“Uncertainty at home and abroad can also make it harder for people to feel connected to their future, or confident about the decisions they’re making today.
“However, while it’s impossible to control everything, there are simple, practical steps that can make a meaningful difference over time.
“Making the most of employer contributions, checking how your pension is invested, and boosting contributions if you can, are all ways to help build long-term financial confidence.
“Our analysis highlights the power small increases to pension contributions could have – building into a much larger pot over time, thanks to the potential power of compound investment growth. The key thing is staying engaged with your financial future and taking action when possible.”
The calculations assume a 3.50% salary growth per year, and 5% a year investment growth, accounting for 2% inflation.
