People of working age are continually being reminded of the importance of saving for the future, and with good reason. Retirement can stretch 10, 20 or even 30+ years, and that's a lot of decades you need to generate an income for – so having a big enough pot to last for that length of time is essential. Happily, it seems that the advice is paying off, with official figures revealing that increasing numbers of private sector workers are saving into a pension.
The Department for Work and Pensions (DWP) has revealed a significant rise in the number of workers participating in a scheme, and it's thought that automatic enrolment is the key driver. The figures show that 6.7 million private sector workers saved into a pension in 2013 (46%), up from 5.9 million (42%) in 2012, and it's the younger age group that's seen the biggest improvement: 30% of those aged 22-29 saved into a pension last year, compared with just 24% in 2012.
It looks as though the message – that everyone should start saving as much as possible, from as early as possible, if they're going to enjoy the comfortable retirement they're dreaming of – is getting through. Hopefully it'll lead to more retirees having the kind of income they need to maintain their desired standard of living, as thanks to the wonders of compound interest, saving early will ultimately lead to a far bigger pot than if you started saving closer to retirement.
Automatic enrolment has been a great driver behind the rise of workplace pensions – people are now enrolled in a scheme unless they specifically choose to opt out, and this default option seems to be having the desired effect. It's a great way to encourage people to save, and once people have started, it's hoped that they'll continue. After all, saving into a workplace pension means your employer contributes too, and you also get to benefit from additional tax relief, which could all add up to a sizeable pot when you hit retirement.
"Automatic enrolment is getting Britain saving and helping build a fairer society," said Pensions Minister Steve Webb. "Almost 7 million people in the private sector are now saving, including many from low to middle income occupations who have never had their own workplace pension before. And, surprisingly, it is young people who are the age group leading the way, with almost 1 in 3 of those in their 20s putting something by for their retirement. I hear too often that people wish they had started saving for their pension early, so I am delighted to find out that more young people are saving."
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