New figures from the Association of British Insurers (ABI) show that the number of workplace pensions hit a record high in 2016, with 7.5 million policies in force – which means more people than ever are saving for their financial future.
The number of pension policies grew by 11% (or 725,000) from 2015, so it's clear that people are rapidly realising the importance of saving for later life. Much of this is thanks to the introduction of automatic enrolment, which is funnelling people into saving and ensuring they stand the best possible chance of having a comfortable retirement.
However, given that auto-enrolment means so many more policies are being created, it increases the chances that people will build up multiple pension pots in their careers. This means there's an increasing need for a pensions dashboard style service, said the report, that will enable savers to get an overview of all their pension savings in one place, so it's hoped that the Government's plans for such a service will soon be realised.
Unfortunately, despite the boost in pension saving, even this may not be enough, with the ABI warning that the majority of savers could still be left without a big enough pension pot to live on. It's generally recommended that an individual saves at least 12% of their income into a pension, yet worryingly few are able to achieve that; even when the minimum contribution rises to 8% in 2019, pensions could still be lacking.
Then there are concerns about those who aren't currently served by automatic enrolment, such as the self-employed, part-time employees and those with multiple jobs. These savers could easily be slipping through the net and may not be saving for retirement at all, so it's vital they get the support they need.
"The success of automatic-enrolment shows how the power of policy can benefit society in the long term," said Yvonne Braun, director of Policy, Long-term Savings and Protection at the ABI, "but we cannot let our guard down now. We urge the Government to widen the auto-enrolment net to help even more people start saving now for their future.
"We also know 8% of a proportion of earnings is not enough for most. We need the Government to set out clear plans to push up contributions after 2019, and to explore how best to engage all workers with saving and planning for their retirement."
If you're saving for your pension, don't wait for minimum contribution levels to be raised – start saving as much as you can right now, and although a 12% target will be difficult to achieve for many, getting close to it will ensure you're in good stead for the future.
And if you're not saving into a pension at all, get started! Speak to your employer about joining their workplace pension scheme, and if they haven't got one yet, you could always go it alone – speak to a pension provider or professional adviser to get started. However, make sure you sign up to your employer's scheme as soon as it's available, to benefit from employer contributions.
Don't forget about other savings vehicles, either. Many save into an ISA for long-term tax efficiency, and the recently-launched Lifetime ISA may be worth considering for those serious about saving for a pension. However you choose to go about it, just make sure you get saving, and you can increase your chances of having a comfortable retirement.
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