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Lieke Braadbaart

Online Writer
Published: 02/10/2017
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From 1 October, all new start-up businesses will have to enrol their employees into a workplace pension scheme straight away. At the same time, HMRC figures reveal that almost 9 million people were contributing to a personal pension in 2015/16, the highest level since records began. All in all, much is being done to ensure that people have a reasonable amount saved for their retirement – are you making the most of it?

Automatic enrolment

Thanks to automatic enrolment, whereby employees have to actively opt out of their workplace pensions, the number of people saving for their future has shot up, and with employers also adding to their employees' pension pots, this has resulted in a whopping £24.3 billion saved in the 2015/16 tax year.

Of course, not everyone will be accounted for through auto-enrolment, as not everyone works for an employer, and even some that do may not reach the £10,000 threshold currently in place to be eligible. As a result, statistics show that there were 8.5 million employees contributing an average of £2,570 each across 2015/16, compared with only 350,000 self-employed people and just 80,000 people who were unemployed, in full-time education, carers, underage or already in receipt of a pension.

With a population of over 65 million, there is certainly room for improvement in these numbers. What's more, the average contribution of £2,570 per year will not be nearly enough to provide for a good retirement on its own. It's important to make sure your pension contributions are invested in the right funds, and you look into adding to this pot in other ways, such as by setting up a lifetime ISA, for example.

Self-employed conundrum

Those who don't have an employer to take some of the burden of saving for a decent retirement will need to be even more savvy. While the self-employed reported the highest average annual per person pension contribution of £5,310, their numbers have been dwindling in the last few years, with 500,000 self-employed having some personal pension in 2011/12, compared with only 350,000 now.

This is despite the number of self-employed overall having steadily increased from 2008, and suggests that fewer self-employed workers may now be able to set aside funds for their future. Yet while it can be harder to focus on saving for the (faraway) future without an employer's help, it's getting increasingly necessary.

So, if you're self-employed, a fulltime carer, or otherwise worried about your pension pot, what can you do? Well, if you don't have a workplace or other group pension, set up your own personal pension fund and make sure you're getting the most out of it.

If you're worried about needing your funds before retirement, then you could put your money in a stocks & shares ISA instead, as these currently give you the best odds of significant long-term growth for those willing to risk their funds on the stock market. Those who would like to buy their first home and save for retirement at the same time could opt for a lifetime ISA, which is available as a stocks & shares option or cash (though note that there is currently only one cash option on the market).

Nearing retirement?

If you feel like you're too close to your retirement age for an extra savings push to make much difference, you could consider using the equity in your house to help fund your post-work life. With this, as with all retirement options, it's important to seek advice before you dive in.

Remember also that the type of retirement plan you choose can influence how much money you'll have to live on. You can speak to an annuity service to find out more, or contact a drawdown provider if you're leaning towards that option.

Other options

If you'd like a clear overview of different pension plans, check out our guide explaining the different types. Another guide that might be useful if you're starting your pension late is 'Starting a pension at 40'. And if you'd like to know more about the lifetime ISA, the risks of stocks & shares ISAs, or any other savings products, we provide an overview of all on their relevant pages.


Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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