£58,000 pension warning issued to millions of part-time workers

Part-time workers are being issued a pension warning over losing THOUSANDS from their pots. Those workers who are working part-time, three days a week, will find themselves with a much lower pension fund than if they had worked full time.

Standard Life said a saver on a salary of £25,000 per year paying in the minimum amount to their pension would have a retirement fund totalling £210,000 by the time they are 68. By switching to part-time, or three days a week, at 35, they will have instead saved only £152,000 by the age of 68 - a £58,000 difference.

That is £58,000 less than if they remained working full-time. Dean Butler, managing director for Retail Direct at Standard Life, part of Phoenix Group said: “Whether personal choice or not, part-time work is a good option for many and can help to balance an income with other responsibilities or interests.

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"Whilst it isn’t always strictly a financial decision, going part-time does have an immediate impact on short-term finances as well as a long-term impact on retirement if you continue saving at the same level but with a lower salary to contribute from."

"It won’t always be possible, but if you can, increasing your pension contributions when you make the move to part-time work could go some way towards, or completely fill the gap," Mr Butler went on to say, as we head towards Christmas.

Standard Life’s analysis finds that someone that began working full-time with a salary of £25,000 per year and paid the minimum monthly auto-enrolment contributions (5% employee, 3% employer) from age of 22, could amass a total retirement fund of £210,000 by the age of 68* in real terms accounting for 2% inflation.

If they were to switch to part-time (3 days a week) from the age of 35, they could build up a pot of £152,000 by the age of 68 again accounting for inflation – £58,000 less than if they remained working full-time. If they were able to increase their contributions to 13% when working part time (10% employee, 3% employer) they could build a pot of £206,000 in today’s prices – almost the same level as a full-time worker paying minimum contributions.