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Half of workers willing to pay more into pensions if employers contribute more, study finds

The Scottish Widows study showed that if minimum contribution rates went up in future, 34% of workers would put in 6-8% of their salary and 20% would pay 8-10%.

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Half of workers willing to pay more into pensions if employers contribute more, study finds
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Half (50%) of permanent workers said they would pay more into their workplace pension if their employer paid a larger share, according to the latest Scottish Widows Retirement Report. 

The study showed that if minimum contribution rates went up in future, 34% of workers would put in 6-8% of their salary and 20% would pay 8-10%.

Scottish Widows calculated that raising total pension contributions from 8% to 12% on the first £30,000 of salaries could boost retirement pots by an average of £40,000. 

Two-thirds of permanent workers supported the idea of the Government raising minimum employer pension contributions, while 42% backed raising employee contributions. 

Support for employer increases was highest among workers in their 20s at 68%, but remained strong among the over 50s at 61%.

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The latest Retirement Report found a knowledge gap among workers. 

41% did not know how much they contributed each month, 19% thought their employer contributed nothing, and 30% admitted they did not understand how pensions work. 

36% did not know how much they should be saving, and 26% were unsure what to do with their money. 

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42% lacked confidence to manage retirement savings and 52% had done little to no research on what they would need for retirement.

Graeme Bold, managing director, workplace and intermediary wealth at Scottish Widows, said: “Automatic enrolment has been a real game changer for how Britain is building pension wealth, bringing millions of people into pensions who wouldn’t have saved otherwise. 

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“But the next phase is a challenge, as half of workers are ready to put more aside if their employer steps up too, but businesses are already up against financial pressure across the board.

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“The reality remains that too many people are still at risk of falling short in later life, with around a third facing a financial struggle in retirement.”

Bold added: “Most people save for retirement through their employer, making the workplace crucial to helping close the gap.

“Industry, government, employers and all of us need to be in the game here to help people build better financial futures. 

“Increasing default contributions from employers and employees will be a big part of making this happen, but people must also understand what they have, if it’s enough and what steps they can take to plug any shortfall over time.”

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