Make the Most of Your Workplace Pension

Want to secure the best possible income in retirement? Ignore the news that auto-enrolment may be changing and make the most of the workplace saving scheme today

Emma Wall 24 August, 2015 | 8:12AM
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Emma Wall: Pension savings currently make up 42% of incomes for retirement households. That's according to MetLife analysis of ONS data. The idea behind auto-enrollment is that retirement savings will make up a 100% of income for retirement households. So, how are we going to get that?

Currently the minimum contribution that you have to make with auto-enrollment is 0.8% of salary once a month. However, that is going up to; first, 2.4% in 2017 and then 4% of your income in 2018. There are some concerns about that.

That's why a consultation is going on at the moment because that jump the people on lower incomes may be too difficult to bear and they may actually opt out of retirement savings, which is not what the government wants them to do. So, there is some talk about your pension contributions rising as your income rises, as you get a promotion, as you get a pay rise.

Putting aside that consultation for now, looking at the current system what can you do? Well, if you only make minimum contributions at the moment, take a look at your savings, take a look at your income, can you afford to maximize contributions, because of course, compound interest, as Einstein said, is one of the great wonders of the world, and if you're maximizing your contributions now, you are more likely to have a much greater income in retirement.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Emma Wall  is former Senior International Editor for Morningstar