Auto-enrolment involvement figures remained strong during the Covid-19 pandemic and in the wake of minimum contribution increases, according to a report by NEST Insight. Auto-enrolment is a Government initiative started some years ago to encourage people to save for their retirement by taking responsibility for their own pension via their workplace. Payments into a pension can come from personal wages and salaries and by the employer.
NEST’s 3rd annual Retirement Savings in the UK report revealed between April 2019 and September 2020, despite predictions that large numbers of people would cease saving for retirement in light of minimum contribution increases and the Covid-19 pandemic, evidence does not support this.
Over the course of NEST’s research timeframe, minimum contribution rates increased from 5% to 8% of qualifying salary and the Covid-19 pandemic resulted in national lockdowns which had a significant effect on savings and the financial well being of many.
The report shows the savings habits of over 9.5 million NEST members – explains that as of March 2020, opt-out rates remained below 8%, while between April and September 2020 opt-out rates grew by just 3% to 11%.
It also discovered there were no significant changes in average contribution levels between April 2020 and September 2020, while around one fifth continued contributing more than the minimum contribution rate.
NEST Insight implied millions of members have been able to continue saving in the same way due to the benefits of “the buffering effect of the UK government’s coronavirus job retention scheme.
The data is only up until last September so it’s still a bit too early to assess the full impact of the pandemic. So far though, savers have continued to save part of their earnings for their futures with around 20% contributing more than the minimum contribution rate.
Being in lockdown has allowed time for some to review their retirement plans and it has drawn the focus on what they may have (or not have) in the way of financial backing to fund their later life leisure plans. Investing in a pension is a very tax efficient way of saving for the future. You local pension adviser can help you.