Pension saving bonus could be best of both worlds
27 October 2016
Commenting on the latest ONS stats on earning, Fiona Tait, Pensions Specialist at Royal London, said:
“The latest ONS data shows that pay, particularly for the lowest paid workers in the UK has seen the highest increase since the 1990s, with an increase of 6.2% for the bottom 5% of earners. Last month the ONS research showed that the average bonus paid in the private sector in the UK last year was around £1,900. Redirecting just some of that pay rise or bonus if possible, into a pension could result in a very welcome ‘bonus’ at retirement.
“For example, a contribution of £100 a month into a pension for 25 years could result in a pension pot being over £35,000 bigger at retirement.
“Royal London’s latest Pensions through the Ages research Feeling the Squeeze, revealed that over half (51%) of 35-44 year olds would save more if they had a pay rise. This is one of a number of Savings Moments of Truth or Savings MOTs which could allow people to boost their pensions.
“These Savings Moments of Truth can really make a difference. There are always other uses for a pay rise or bonus, and often the money is spent before it’s actually been received. But by setting aside just some of a bonus or pay rise into a pension, people could have the funds and income to have a ‘treat’ in the future, as well as today - giving them the ‘best of both worlds’!”
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Notes to editors:
- The findings of Pensions Through the Ages: Feeling the Squeeze, are based on in-depth quantitative analysis of 2,418 people aged 35 to 44 across the UK using a bespoke survey panel conducted by Harris Interactive UK from May 26th – June 9th 2016.
- Calculations assume a worker is earning the average private sector salary of £26,062 per annum and is a basic rate tax payer. For a 40 year old who decides to retire at 65, so in 25 years’ time, an extra £100 regular contribution could secure a fund of £35,200.
- Source, ONS Annual Survey of Hours and Earnings: 2015 Provisional Results:
https://www.ons.gov.uk/releases/annualsurveyofhoursandearningspensiontables2015provisionalresults/releases/annualsurveyofhoursandearningsintheukprovisional2016andrevised2015 and http://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/2015provisionalresults#public-and-private-sector-pay.
About Royal London:
Royal London is the largest mutual life, pensions and investment company in the UK, with Group funds under management of £93.8 billion. Group businesses provide around 9.1 million policies and employ 3,106 people. (Figures quoted are as at 30 June 2016).