Over 60 per cent of people chose to increase their monthly pension payments when their employer agreed to match the increases, analysis from Hargreaves Lansdown has found.
The analysis, which looks at 53,000 workplace pension members, also found that 49 per cent of people opted to increase their savings as a result of “good” communication from their pension provider.
It follows the calls that the recent overall increase in auto-enrolment from 5 per cent to 8 per cent in April is still insufficient for members, with many believing savings should amount to at least 14 per cent of an annual salary.
Hargreaves Lansdown senior analyst, Nathan Long, said: “The optimum level of workplace pensions contributions are like Goldilocks’ search for the perfect porridge.
“With pensions, too little going in and people don’t have enough to live on in retirement, too much and they won’t have enough to live on now; they might even just opt out.”
Despite this, the analysis also found that if employer matched contributions alongside face-to-face guidance, three-quarters of staff would increase the amount they pay in.
According to the analysis, employer matching contributions works better for men, with 64 per cent choosing to increase compared to 58 per cent of women.
Age also appeared to be a factor, with 33 per cent of under 30s savings more through matching, compared to 18 per cent of over 50s. Members with smaller pot sizes do not appear to influenced by employer matching.
Long added: “While debate rages on what the level should be, the government should look to employers to incentivise higher contributions by offering to match additional contributions made by their employees.
“It’s an approach used by some employers already and is particularly effective at incentivising the under 30s to pay more in.”
The government has said it will not be until the mid-2020s before changes are made to the current auto-enrolment system. Under current proposals, staff will be auto-enrolled from 18, not 22, while members would accrue pension contributions from the first pound earned, not the current £6,136.
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