Around half of UK workers would increase their workplace pension contributions if their employer’s contributions increased.
This is according to Scottish Widows’ latest retirement report, which found that if minimum contribution rates were raised, 34 per cent said they would be willing to contribute between 6 per cent and 8 per cent of their salary. Meanwhile, 20 per cent said they would contribute between 8 per cent and 10 per cent.
According to Scottish Widows, increasing minimum contributions from 8 per cent to 12 per cent on the first £30,000 could increase retirement savings by around £40,000.
The report also found that 66 per cent of workers supported an increase to the minimum employer contribution, compared to 42 per cent of those who supported higher employee contributions.
But it also notes that 54 per cent of employers are unable to increase pension contributions due to financial pressures.
Elsewhere, 41 per cent do not know how much they contribute each month and 30 per cent said they do not understand how pensions work. Around 36 per cent said they do not know how much they should be saving for retirement, 42 per cent lacked confidence in managing their retirement savings and just over half don’t know how much they would need in retirement.
Scottish Widows managing director, workplace and intermediary wealth Graeme Bold says: “Automatic enrolment has been a real game changer for how Britain is building pension wealth, bringing millions of people into pensions who wouldn’t have saved otherwise. But the next phase is a challenge, as while half of workers are ready to put more aside if their employer steps up too, but businesses are already up against financial pressure across the board.
“The reality remains that too many people are still at risk of falling short in later life, with around a third facing a financial struggle in retirement. Most people save for retirement through their employer, making the workplace crucial to helping close the gap.
“Industry, government, employers and all of us need to be in the game here to help people build better financial futures. Increasing default contributions from employers and employees will be a big part of making this happen, but people must also understand what they have, if it’s enough and what steps they can take to plug any shortfall over time.”
