Updated : Nov 19, 2019 in Articles

Make the Most of Your Workplace Pension

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.

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