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Home Lifestyle One in five people wouldn’t pay more into their pension – but are they missing out on employer boost?

One in five people wouldn’t pay more into their pension – but are they missing out on employer boost?

by Wanda Rich
senior couple standing outside front door of home SBI 301057927
  • When asked what it would take to make them contribute more, the most common answer was a pay rise, with 37% giving this answer.
  • The second most common answer, offered by almost a third of people, was if their employer agreed to match their higher payment. This was particularly popular with younger people with 38% of people in the 25-34 age group choosing this option.
  • Bigger payments from the government would convince a quarter of people to pay more in (24%).
  • However, people don’t always need more money.17% said they would contribute more if they were advised to while 16% said they would if they realised they had a shortfall.

Data from a study of 2,000 people by Opinium for HL in September 2021.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“One in five people wouldn’t pay more into their pension – no matter what, while almost two in five said they would need a pay rise, and one in four said they want government to contribute more. However, there are far smaller changes that could make a big difference.

The second most common answer was that people would pay more into their pension if their employer did. However, this might already be available. Many employers are willing to go beyond auto-enrolment minimum contributions and match employee contributions up to a certain point. The figures show this is a particularly popular option among younger age groups and over time this can really make a difference to their financial position in retirement.

And some people don’t need any extra cash, they just need a nudge or too. Accessing guidance and information can also take retirement planning to another level by empowering people to make retirement decisions. People often intend to review their pension contributions and then don’t get around to it -the right information can prompt people to act. Almost one in five said they would contribute more if they were advised to while others said they would be spurred to act if a pension calculator told them they had a shortfall.

It’s worth checking whether you can get any additional guidance from your employer. Otherwise there are plenty of pension calculators available online that will show you where you stand. The right information could make all the difference in helping you do the right thing.”

Top tips for boosting your pension

  • Regular contribution increases. It can be easy to set your pension contributions when you first join a scheme and then forget about it. Over time your circumstances can change, and you can be able to contribute more so it’s worth regularly reviewing your pension. It can also help to set contribution levels as a percentage of salary, so any pay rise will automatically boost your pension.
  • Employer contributions. While many employers only pay minimum contributions as set out under auto-enrolment rules, others are willing to pay more. Some will match your extra contributions up to a certain level and this can really make a difference. It’s always worth asking if you can benefit from extra employer contributions.
  • Pension tax relief. The government also contributes to your pension in the form of tax relief. If you are a basic rate taxpayer, for every £80 you contribute the government will top it up to £100. If you are a higher rate taxpayer then every £60 you put in will be topped up to £100.
  • Carry forward. Currently most people can contribute up to £40,000 per year to their pension and still benefit from tax relief -this is called the annual allowance. If you did not use up your full allowance in any of the last three tax years then you can carry this forward and pay an increased contribution. This is dependant on you being a member of a registered pension scheme at the time and also that you earn more than what you are contributing -i.e. if you want to contribute £100,000 using carry forward then you need to be earning at least £100,000.