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Unlike the 1:7 people retiring this year who have not made financial provision, I’ve been concerned with my pension arrangements throughout my career. It’s never too late to save for your retirement and the new auto-enrolment pension rules will help many younger workers. Are you ready to pay more into your auto-enrolled pension?

woman working

Chilly financial winds

Pension experts state that a single person retiring today needs an income of at least £186.77 a week to have an acceptable standard of living. However, a pensioner retiring today would have a maximum weekly state pension of £159.55 a week or just under £8,300 a year; a chilling shortfall of £1,400 per year.

The pension white-knight

Auto-enrolment is a Government pension initiative to help more people save for retirement. After April 5, auto-contributions rose to 3%, costing £517 a year on average earnings. In April next year, the employee contribution costs will rise to 5%, or £876 a year. That will make a pension difference for many employees, as the employer is paying a minimum of 3% towards their pension. An overall 8% contribution your pension pot is a great savings-start.

Can you opt out?

If you don't want to pay extra pension costs, you have two options:

  1. Opt out and stop making contributions altogether.
  2. Or opt down and continue to contribute 1%. The downside is that your employer stops paying their 3% contribution.

Think big

Few employees can imagine their eventual retirement day, plus no one knows how much they are going to earn or how the stock market will perform. Here are calculations from an insurer on the possible size of a worker's eventual pension pot.

  • Imagine saving from the age of 25, on the average salary. With combined contributions of 8% a year, it believes that person could achieve a pot of £327,000 by state retirement age.
  • Imagine the saving started at the age of 35, then pension pot is much smaller pot. With 8% contributions until retirement, their pot could grow to £170,000.

What income can I expect in retirement?

A pension pot is a way to finance retirement. The standard method is to purchase an annuity, or income for life. If a worker uses their whole pot, a 25-year-old who remains opted in can expect an annual income of up to £18,939 at the age of 65. Although, to date 9% of workers have opted out, the clever money points to a typical worker remaining opted in.

ChildMax is affordable way to pay your take home salary while you’re on 12 months’ unpaid leave looking after a sick child. Premiums start from £49.50 or for easy budgeting an initial payment of £8.25 followed by eleven monthly payments of £3.75. Get a quote with 5 questions which takes one minute.

Visit at or call the UK call centre 0333 323 0098 for more information.

Important: If you feel that you have a pension issue, please seek professional pension advice.


Date: 16 April 2018 by Max Robinson