£20 pension message sent to millions of households
Households have been told they can substantially boost their pensions and make a huge difference to their later lives with one simple change. Experts say putting aside just an extra £20 a month into the pension could boost the overall pot at the time of retirement by around £100,000.
It could result in a far more comfortable retirement. While many people find it difficult to save each month, those who are able to divert a little more of their salaries to their pensions may find it worthwhile in the long run.
It comes amid a Government Pension Review which could see both employer and employee pension contributions increase to help fund people’s retirement. Analysis from Stocklytics revealed that a 22-year-old worker earning £25,000 a year, under the current contributions of 5% from the employee and 3% from the employer, will leave them with £184,000 in retirement.
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By increasing the contributions to 6% for both employers and employees, the same individual would have £275,000 by the time they retire, an increase of £91,000. They added the extra percentage point would cost the individual just £21 per month, with most of the responsibility landing on the employer.
A spokesperson from Stocklytics, said: "This research is promising for savers. Under the new proposals, the possibility of a 22-year-old worker having £275,000 by the time they retire, saved in a cost effective and tax efficient manner, is reassuring to the younger generation. It will also help show younger savers that consistent retirement planning from an early age will help them reach their long-term goals.
"However, it is important for all pension savers to be aware of any fees attached when saving for their retirement, as even the smallest of fees can cost thousands over the long term. Pension providers need to ensure their fees are transparent and widely available so savers can make informed decisions.”