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UK workers happy to pay double into their pensions

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UK workers would be happy to pay more than double the minimum required into a pension every year to help build a bigger pot for retirement.

The current automatic enrolment default rate is 3%, with a further rise to 5% expected in 2019. But the average worker is willing to pay 7%, according to research by pensions and investment firm Aegon.

Younger workers support an even higher contribution level with nearly one in six of those in their 20s willing to pay between 11% and 15% of their salary towards pension saving.

Kate Smith, head of pensions at Aegon, said: “There’s some concern that increasing auto-enrolment contributions for employees would result in some people stopping their contributions.

“However, our research is a strong endorsement that not only will people take the increases in their stride, they’re realistic to appreciate that a comfortable retirement requires saving at higher rates and are prepared to pay more.”

Aegon’s research found that UK workers have embraced auto-enrolment, with 25% saying that being auto enrolled was the nudge they needed to save for retirement.

Aegon surveyed 14,400 workers and 1,600 retired people in 15 countries and found workers in the UK were the second most likely globally to cite employment-related reasons for saving for retirement.

Smith said: “Saving in a pension through your employer has become a natural part of working life in the UK today, with people embracing saving in this way.

“There’s also a growing appreciation that the level of retirement income is dependent on the contributions individuals and their employer make throughout their career, leading to a desire to pay more.”

Further reading: Five things you need to know about auto-enrolment and Can I opt out of the auto-enrolment contribution rate rise?

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