Working from home could boost pension pots by over £250,000, Standard Life analysis shows

Employees working from home could significantly increase their retirement savings by reinvesting commuting cost savings into their pension, according to new analysis by Standard Life, part of Phoenix Group.

With debate continuing over the future of remote and hybrid working, the research highlights a tangible long-term financial benefit for workers who use the flexibility to strengthen their retirement planning. The findings suggest that even working from home a few days a week could lead to a substantial boost in pension wealth by the time employees reach retirement.

Based on a salary of £25,000 and minimum auto-enrolment contributions starting at age 22, an employee who works entirely in-office could expect to accumulate a pension fund of around £210,000 by age 68, assuming 2% annual inflation. However, someone who works from home three days per week and chooses to invest their annual commuting savings of £2,072.40 could retire with a pot of £370,000 — a £160,000 uplift.

Those working from home four days per week could accumulate £423,000, and fully remote workers could build a retirement fund of £476,000, £266,000 more than their fully commuting peers.

Standard Life estimated that the average commuter spends £3,454 annually travelling to work five days per week. Reducing this to two days a week slashes costs to £1,381.60, offering a practical opportunity to redirect over £2,000 per year towards long-term savings.

The analysis reinforces the view that hybrid and remote working models can offer more than just flexibility and work-life balance. For younger workers in particular, directing even small annual savings into a pension could have a transformational impact on their retirement income.

The research arrives at a time when employers are reviewing working policies and employees are re-evaluating their financial priorities. With cost-of-living pressures and pension engagement high on the agenda, the study encourages workers to consider using hybrid working not only to save time and money, but to invest in their financial future.