New analysis suggests that pension pots could grow by around 30% by the end of this year due to the scheduled rise in workplace pension contributions.
According to Aviva, the 3% increase in auto-enrolment contributions, from 2% to 5% next month, could equate to an additional £840 for pension savers. Based on the average UK salary of £26,572, this in an increase from £600 last year.
In addition to the uplift in savings, the soon to implemented changes is likely to also result in the pension pot available to retirees increasing. For the average employee who started saving into a workplace pension in 2012, around £30,000 will be saved in their fund at retirement.
Following the changes, the average employee could see this growth to £66,000, more than twice the current total saved.
Since 2012, a further 9.3 million employees have been automatically enrolled in a workplace pension scheme.
Commenting on the analysis was Andy Curran. The MD Corporate at Aviva stated: “Saving via a workplace pension is one of the rare times in life when doing nothing pays. Simply by remaining in their workplace pension scheme, savers can benefit from their employers topping up their savings and receive the added peace of mind that comes from knowing they are contributing to their long-term financial health. While the changes mean employees will also need to increase contributions from their own pay packet, making a small sacrifice now can add up to a big difference when it comes to retirement.
“Auto-enrolment has been an incredible force for good since its introduction in 2012 with more people than ever before now contributing on a monthly basis towards their retirement. It is vital the latest milestone is used as a basis on which to build further momentum around the need for people to save for retirement. If as a society we are to avoid a retirement savings crunch further down the line, we must go further still in the years to come.”
