The Pensions Awareness Day bus has been making its way around the country all week, with it reaching London tomorrow, 15 September, in time for Pensions Awareness Day 2018.
With that in mind, several in the industry have reiterated the message of not delaying to save for retirement and the importance of higher contributions.
Aegon head of pensions Kate Smith says that pensions give people choices, and “getting into the savings habit early allows people to retire when they are ready, rather than keeping on working because they have to”.
“People should be aiming to save about 15 per cent of their earnings into a pension over their lifetime. Based on average earnings of £27,040 a year, this means saving around £340 a month. But as pension contributions attract tax relief, the change in take home pay is only £272 a month for 20 per cent income tax payers.
“Nearly all jobs now come with a pension and an employer contribution, making pensions more affordable for the employed. Some employers offer matched contributions, where if employees pay more their employer matches it.
However, Smith warns that the self-employed are “not so lucky”.
“They don’t have the benefit of an employer contribution, so it’s even more important they start saving early. £100 saved at age 25 is considerably more valuable than £100 saved at age 55 due to the magic of compound interest. The longer people delay saving, the more they have to save later to make up the shortfall, which could put retirement in jeopardy for many.”
In addition, Selectapension director Peter Bradshaw urged younger generations in particular to do more, to save enough to fund a comfortable retirement.
However he praised the Pensions Awareness Day: “Awareness days are always a positive way to draw attention to the importance of retirement planning, particularly for younger workers, who have time on their side to build up a reasonable pension pot.”