Britons could boost pension income by £7,000 thanks to new policy

Pension savers could get a major boost to their retirement income of around £7,000 a year as the auto enrolment scheme expands.

Legislation has been approved for all workers aged 18 and over to be auto enrolled onto their workplace pension scheme regardless of their income.

The scheme was previously restricted to people aged 22 and over and those who earn at least £6,240.

Pete Glancy, head of Policy at Scottish Widows, told Express.co.uk: “Expanding the auto enrolment (AE) scheme will be most beneficial to younger and lower-earning workers.

“Starting pension savings from the first pound earned could mean that, by the time they retire, the youngest workers in lower-earning groups could have a pension pot that is 150 percent of the value that it would have been without the AE expansion.

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“For a median private pension income of £13,400, this could mean an increase to £20,100 a year for a single individual.”

This means a median private pension income could increase by £6,700 a year thanks to the changes.

He said the changes will particularly benefit young people as people in their twenties are the most likely to face poverty when they retire.

Mr Glancy also said the changes are a “positive step” in helping improve the retirement of disadvantaged groups such as women and disabled people.

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He commented: “It is therefore important for people of all ages to understand their workplace pension and how they may be able to make it work harder for them.

“While these reforms will benefit many employed people, the self-employed still lack formal incentives to save adequately for retirement, receiving just over a third of the retirement income of a full-time employee on average (£10,000 vs. £27,000).

“Industry and Government need to continue looking at ways to support self-employed people with their long-term savings plans.”

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Jon Greer, head of retirement policy at Quilter, encouraged pension savers to get up to date with their retirement savings.

He said: “With people living longer than other generations, having enough savings to support oneself in later years is really important.

“The earlier workers start saving, the more they will have by the time they retire, thanks to the effect of compound interest over time.

“However, with the current financial pressures, especially on young people, it’s essential to know how much is being saved and how it’s growing to ensure they are on the right track for a secure retirement.”

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