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4 March 2020

For many twenty-somethings the idea of securing their own home is probably far higher on the list of priorities than worrying about the shape of their finances in forty years’ time! And while this new generation of savers won’t actually be needing their pension pots until the 2060’s there’s no denying that when it comes to planning for the future ‘the sooner the better’ is a valuable attitude.

Thanks mostly to the auto-enrolment process introduced in 2012, the majority of 22-29 year olds (84%) are now paying into a pension, compared to less than 25% in 2012. But just how much should they be putting aside and how will the choices they make now affect their retirement plans?

Since April 6th 2019 (for everyone aged between 22 and state pension age earning over £10,000) a minimum of 8% of an employee’s gross monthly pay before tax is paid into their pension. This consists of 3% from the employer, 4% from the employee and the final 1% from pension tax relief.

There are two interlinked factors to consider when making pension contributions. The first is how much of your salary you can afford to put away each month. The second is to envisage the size of the pension pot you want to have available to you in the future. Many people are only making the minimum 8% provision without really understanding how much this will yield. In fact, a recent report from Scottish Widows defined ‘adequate’ as 12% of income.

Despite this, two in five of 22 – 29 year olds surveyed felt that they were saving ‘adequately’ for retirement.

At Corinthian we take the time to explain the pension conundrum to clients and their employees. We are passionate in our belief of engaging all employees at whatever stage of life they are at; we really do want them to be able to make their retirement dream a reality.

Many employees have made contributions into more than one pension scheme, this will only increase with the introduction of Automatic Enrolment, so it is imperative that people understand the options and possible benefits of consolidating these pots.

Speak to a member of the Corinthian team to discuss how we make the complex simple!

27 February 2020

The 2019 Automatic Enrolment Evaluation Report, published this week by the Independent Pension Commission and the DWP, demonstrates that 87% of eligible employees now contribute to a workplace pension; with a reassuringly low number of employees choosing to opt-out of auto enrolment. Only rising from 0.72% to 0.76% during the first quarter of the 2019/20 tax year.

The independent Pension Commission was introduced to address long term retirement saving in the UK. The work of the commission was further supported in 2012 when the Government launched automatic enrolment, designed as a way to ensure that the UK has a robust pension system enabling individuals to save towards the retirement they aspire to.

Since the start of auto enrolment in 2012 more than 10.2million workers have been automatically enrolled. Data collected up to 2018 found that the number of eligible employees participating in a workplace pension had increased to 18.7million – a 55% increase since 2012.

The report also noted a 47% increase in the number of private sector employers with some sort of workplace pension provision. This accounts for 62% of private sector employers.

“Automatic enrolment has been an unparalleled success, transforming pension saving for millions of people”, comments Therese Coffey, Secretary of State for Work and Pensions.

“The saving habit is sticking too, as people recognise the importance of putting money towards their retirement” She continues, “I want people to save even more, if they can, to make sure the retirement they get is the retirement they want.”

Automatic Enrolment was introduced in stages and the IPC have declared that this is the last annual report planned now that the implementation period for automatic enrolment is over.