New research from online pension provider, PensionBee, reveals a notable enthusiasm among c.1,000 UK pension holders “for the recently announced ‘pot for life’ pension model.”
Over three-quarters (76%) of pension savers “expressed that they would consider opting for the new model, while only 5% of savers stated that they would not be interested in having their own pension into which employers can pay contributions.”
Of the respondents who were considering the new proposal, “the most popular reasons for support included ‘it seems more convenient’ (55%) and ‘it’s an easier concept to understand than the current system’ (48%).”
Other positive responses “included ‘I like that I would be able to choose my provider from a fee perspective’ (30%), ‘a long-term relationship with one provider might make me feel more engaged with my pension’ (30%) and ‘I like that I would be able to choose my provider from an investment choice perspective’ (24%).”
Becky O’Connor, Director of Public Affairs at PensionBee, commented:
“The Chancellor’s announcement of a consultation on allowing savers to choose their own pension into which employers can pay is a welcome step. Our research suggests this could be met with strong support from workers. Careers are becoming more complicated. People can have several jobs throughout their lifetime, or go self-employed for a time and then go back to employment. They might consolidate old pensions, then continue to build new ones through subsequent work and want to have these contributions paid into their personal pension, but may find their employer might not yet allow it. This simple change could give those who want to build their own pension and have the convenience of having an employer pay straight into it the opportunity to do so.”
As covered, analysis by PensionBee, an online pension provider, has found that putting a pay rise in a pension now can “lead to a bigger rise in annual retirement income later on.”
Regular pay including bonuses in the UK “rose 8.5% in the year to July 2023, taking the average annual pay to £34,528.”
While rising prices might take the shine off a pay rise, “for those able to consider putting part or all of an increase into their pension, the reward for doing so in retirement can be significant.”
PensionBee calculated that a 40-year old on “an annual salary of £34,528, who puts a 8.5% pay rise of £2,705 (or £225 a month extra) into their pension each year, could boost their pension pot by £90,000 at retirement.”
