More of us are saving into a pension, but are we doing enough?

The latest figures from the Office for National Statistics (ONS) show that four out of every five workers is now saving into a pension – in large part due to auto-enrolment.

Since auto-enrolment was introduced the proportion of private-sector workers saving in a workplace pension scheme has more than doubled from 32 per cent to 75 per cent.

This boom in pension saving means that for the first time many workers will have a workplace pension to support them into retirement alongside the state pension.

However, many experts fear that not enough is being saved by many workers, with the majority relying on the minimum combined contribution of eight per cent (a minimum three per cent employer contribution with employers typically making up the rest).

As a result, the average amount held by most private-sector employees paying into a private pension pot is just £10,300, according to the ONS. In comparison, the average public-sector pension pot stands at around £65,400.

Further analysis of the latest ONS data shows that the likelihood of having a workplace pension increases with earnings, with workers earning around £600 or more a week having the highest workplace pension participation (89 per cent).

Workers in the accommodation or food services fields were the least likely to contribute money towards a workplace pension. However, unlike some other investment trends, workplace pension participation levels were almost equal between men and women (80 per cent and 79 per cent respectively).

Unfortunately, the situation may be much worse for self-employed workers who are not required by law to provide themselves with a pension under the auto-enrolment scheme.

This means that many self-employed workers save little or nothing for their retirement via a pension. Instead, many may rely on their savings from earnings to sustain them in later life.

Those relying solely on a workplace pension for their retirement may wish to seek independent advice to see how they can boost or subsidize their pension pot, so they have a more comfortable retirement.

Link: Four in five now save into a pension compared to less than half a decade ago – but are they saving enough?

Posted in Blog, Wealth Management News.