AE contribution hike 'could make £100,000 difference' in retirement

From 6 April 2019

Hannah Godfrey
clock • 1 min read

Next month's auto-enrolment (AE) contribution increase could ultimately make a difference of more than £100,000 to savers' retirement savings, according to calculations by Interactive Investor.

From 6 April, contribution rates associated with auto-enrolled pensions will rise from 5% overall to 8%. Broken down, this means employees will have to contribute 5%, while employers will contribute at least 3%. At a very basic level then, the increase will mean a worker with an annual salary of £20,000 will accrue £1,600 a year into their pension - up from the current £1,000. Using that as its starting point, Interactive Investor has calculated that a 30-year-old with a starting salary of £20,000, increasing by 1% each year until retirement at age 67, should be tens of thousands of p...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Retirement

Perfect timing: How to advise clients on the right time to retire

Perfect timing: How to advise clients on the right time to retire

Striking a balance between health, wealth and personality

Richard Hulbert
clock 05 February 2024 • 4 min read
Baillie Gifford: Enjoying later life without an income from work

Baillie Gifford: Enjoying later life without an income from work

The latest from PA’ Digital Working Lunch webinar series

Professional Adviser
clock 12 December 2023 • 2 min read
Knowledge is power: How to help turn retirement dreams into reality

Knowledge is power: How to help turn retirement dreams into reality

Being on top of money is key to achieving retirement ambitions

Emma Barrow
clock 29 November 2023 • 6 min read