Brits have been told how to “immediately” boost their pensions with one simple move. A pensions expert has urged Brits to maximise their pension savings by utilising workplace contributions.
The most important thing is to never opt out of a workplace pension scheme, which around 500,000 people do every year, according to Department for Work and Pensions (DWP) figures. Almost 10% of people under 30 opt out every year, yet delaying can see Brits miss out on thousands of pounds. Waiting just five years to opt in could result in £40,000 less in the pot.
Maximising employer contributions
You can also increase the contribution your employer makes to your pension. They usually match contributions, meaning if you pay an extra 1%, they will too. There is usually a maximum amount they will match.
Robert Cochran, pensions expert at Scottish Widows, said: “Leaving your workplace pension on default settings is financial self-sabotage.
“Instead, find out how much more your employer could add in, as many will match your contributions over and above the minimum. This is an immediate, guaranteed way to boost your pension pot. Don’t leave free money on the table.”
Contribution levels and potential savings
Auto-enrolment requires a minimum total contribution of 8%, with 5% from you and 3% from your employer. Some employers offer to match higher employee contributions up to 7% or 10%.
On a salary of £20,000, a 5% matched contribution means an annual pension saving of £2,000. This goes up to £3,200 a year with 8% matched contributions.
Starting early makes a difference
Jenny Holt, customer savings and investment director at Standard Life, says: “This is why starting early can make such a difference.
“Even modest contributions made earlier in your working life have longer to benefit from potential compound investment growth, while delaying saving can mean missing out on the years when your money could have been working harder for you.”
