Better education can boost pension contribution rates

Helen Baker, partner at Sackers, comments on PLSA research analysing UK generational differences in expected retirement income:

“Auto enrolment is working in terms of bringing more people into retirement saving.  As with any change, Rome can’t be built in a day, and so taking stock before the contribution rates increase and as the first three yearly re-enrolment cycle is happening makes sense. Increasing contribution rates will help, but as the PLSA notes, there are challenges here. There will be limits on how much pension savers and their employers can spend on pensions. In addition, the existing relatively low rates of contribution may well have played a part in the success of auto enrolment because many have been set at a level that savers can afford, keeping opt out rates low.

Contribution rates matter, but so does education and information. If we can improve understanding of pension saving and why it matters, individuals will be able to make informed choices earlier in their working lives. It may not be possible for everyone to make the pension contributions at the levels that would ideally be paid throughout their working lives, but improved understanding makes it more likely that this will happen. This is another challenge and one that it would be worth looking at in parallel with contribution rates.”


The Pensions and Lifetime Savings Association (PLSA) has today published new research analysing the incomes different UK generations can expect in retirement. ‘Retirement Income Adequacy: Generation by Generation’ reveals that automatic enrolment will deliver a real improvement in the retirement outcomes of millions of people in the UK, but there is still room for improvement.


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