Top up the Pots

Automatic enrolment into workplace pensions has been hugely successful at drawing in millions of new pension savers. However, analysis in this report shows that the current minimum contribution rate is likely to be too low to provide a comfortable retirement for many people, particularly those on middle incomes.

To address this, Which? recommends a higher default contribution rate be introduced for those on middle incomes. A lower, minimum rate should remain the default for those on lower incomes to prevent financial hardship and avoid over-saving.

The report also highlights how working less to provide care for children can reduce savings into workplace pensions and greatly impact on retirement incomes. Since caring responsibilities tend to be unequally shared within households then this mostly disadvantages women.

National Insurance credits mean this need not lead to a loss in state pension entitlements, but no such mitigating factor exists for workplace pensions. Which? therefore recommends that the government makes a lump-sum ‘New Parent’ pension contribution to a nominated defined contribution pension scheme for a mother on the birth of her first child.