Play the Long Game to Win With Retirement Saving

Younger investors are urged to stay in the game when it come to pension saving ahead of the auto-enrolment minimum contribution jump due this April

Emma Wall 18 January, 2019 | 9:53AM

 

 

Emma Wall: Auto enrolment was introduced in 2012. The initiative is designed to get as many people as possible into workplace pensions so that they can afford to fund a comfortable retirement. So far, eight million extra people are in workplace pensions because of auto enrolment. But this year sees some changes to the initiative.

Last April, the minimum contribution rate for both employer and employee was 2%. Then last April, this rate was raised to 5% and this April, in just a few months' time, the total minimum contribution will rise to 8%. This means a minimum of 5% from the individual, including tax back from the government, and 3% from their employer.

This is quite a jump in minimum contributions and the concern is that these so far very low dropout rates will rise. Particularly at risk are those in low income categories and those at the beginning of their career.

Particularly those at the beginning of their career should try not to be put off by volatile markets of late and the long journey ahead of them because investing is like a game and you have to be in it to win it.

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About Author

Emma Wall

Emma Wall  is Senior International Editor for Morningstar