The size of the average pension in the United Kingdom has grown from less than £30,000 to a whopping £50,000 in the space of just two years, according to a survey conducted by Aegon.
The life insurance company stated that an increased awareness of the importance of saving for the future has played a significant role in the growth of British pension pots. They also claimed that this enhanced mindfulness among UK workers has been spurred by the pension freedom reforms of 2015.
Pension auto-enrolment also appears to have been a factor, with millions of employees around the country now saving thousands of pounds by putting money into workplace schemes. The minimum contribution currently stands at two per cent.
Further noteworthy findings from Aegon’s research include the fact that men are currently saving up to three times more than women. Men have more than £73,000 in their pension pots on average, while women have a little less than £25,000 on average.
It was also revealed that a larger number of workers are investing in Isas in the modern climate, with people saving an average of over £20,300 using these schemes (up from just over £13,000 this time last year). The annual Isa limit was raised to £20,000 on 6th April.
The Pensions Director at Aegon, Steven Cameron, said that he is encouraged by the results from the survey but admitted that there is still a “long way to go.”
“Two years on, and all the signs point to the pension freedoms having paved the way for a smoother road to retirement,” said Mr Cameron.
“People have moved up a gear, saving more and becoming more engaged with their pensions.
“Giving retirees the freedom to do as they please with their money is having an impact not only on those who are taking advantage of that freedom today, but the trickle effect is positive down the generations.
“However, there’s still a long way to go. People will need to accelerate their saving to reach their retirement destination and make the UK a nation of long-term savers.”
While Mr Cameron acknowledged the benefits of pension auto-enrolment, he also claimed that new approaches are required to assist the growing numbers of people who aren’t hired on full-time by an organisation. These include the likes of contractors, those who work through Umbrella Companies and self-employed workers.
“Auto-enrolment does mean many more people have a workplace pension without taking personal action, but default contribution levels will only go so far,” he said.“And there’s a growing issue, as more and more people are self-employed and won’t have the benefit of a workplace pension at all.”
“And there’s a growing issue, as more and more people are self-employed and won’t have the benefit of a workplace pension at all.”