According to the Q2 2017 edition of True Potential Investor’s Tackling The Savings Gap Consumer Savings and Debt Data report, 598,000 employers were enrolled into a workplace pension scheme. In total, they contributed £87.1 billion collectively over the 12-month period.
The success of these auto-enrolment schemes along with the continued popularity of personal pensions and increased media coverage have left Brits fully aware of how important their pensions are.
The Q3 2017 edition of the Tackling The Savings Gap Consumer Savings and Debt Data report suggests that the amount we’re contributing to our pension pots is being hampered by our other financial commitments. During the quarter, 45% of survey respondents failed to make a pension contribution; this was most common in 45 to 54 year-olds (47%). 18 to 24 year-olds had the second largest proportion of people who failed to contribute (44%).
This, alongside with the report’s other findings, makes for interesting reading. It found that a third of its respondents worry about money on a daily basis, while 37% admitted to lying about their debt. Perhaps then it’s not because of a lack of awareness; it may be because their financial situation simply won’t allow them to make a contribution.
For those who did contribute to a personal pension fund in Q3 2017, their contributions averaged at £203. In contrast, the average amount of debt taken on by UK consumers each month stood at £370 — significantly higher than the amount put towards their pensions.
When considering financial planning for the future, we must too consider the purchases we’re making now. Regretful spending averages at £143 per person per month, as Brits splash out on food, clothes, alcohol and other items that are later regretted. If this money was invested in a pension instead for the full span from age 30 to 65, it could translate into almost £320,000. Based on the fact that Brits believe they will need £23,000 annually to live comfortably in retirement, this amount would be enough to fund 13 years of retirement.
The amount we’re wasting monthly on items we later regret equates to £4.70 per day. As the above example shows, investing this amount instead could lead to a solid start towards your pension pot in retirement. As such, we shouldn’t underestimate the impact that small yet regular contributions can have. This underlines the importance of better financial management to allow us the capacity to add such funds to our pension pots.