Saving just one per cent more could increase pension savings by 25 per cent 

Saving a small amount more into a workplace pension could significantly improve long-term financial outcomes, according to new insight from Wealth at Work. 

The financial wellbeing provider says that saving 1 per cent more each year into a workplace pension could boost retirement savings by as much as 25 per cent, particularly for younger employees whose employers match additional contributions. 

The findings come as confidence around retirement continues to decline across the UK workforce. Research from Wealth at Work shows that 45 per cent of workers now believe they will never be able to afford to retire. This has risen from 39 per cent in 2024 and 33 per cent in 2023, reflecting the ongoing impact of the cost-of-living crisis on long-term financial planning. 

Under current automatic enrolment rules, employers must contribute a minimum of three per cent of qualifying earnings, with employees contributing five per cent to reach a total of eight per cent. However, many employees remain unaware of how small increases above this level can compound over time. 

Wealth at Work highlights that for a basic rate taxpayer aged 25 and earning £20,000, increasing pension contributions by one per cent, with an employer match, would reduce take-home pay by less than £12 per month. Over time, this could increase their pension pot from £99,341 to £124,177 by retirement at age 68. 

Jonathan Watts-Lay, Director, Wealth at Work, comments: “It’s very concerning that many people are worried that they will never be able to afford to retire. With high living costs, it is completely understandable why some may think that saving for retirement isn’t a priority.” 

He adds: “When speaking to young people, many don’t realise the huge difference a small increase in their pension contributions can make if they start in their 20s, compared with starting in their 30s or 40s; especially if their employer offers to match it. Once we point out that saving an extra 1% now with their employer matching this can result in 25% more in their pension pot at retirement, saving a bit more now makes a lot of sense.” 

The data points to a wider workplace wellbeing challenge. Financial insecurity is increasingly recognised as a key driver of stress, distraction and reduced productivity at work, particularly as employees balance immediate financial pressures with long-term planning. 

Watts-Lay continues: “Small increases can have a significant impact on an employee’s pension savings, but small reductions in pension savings can also make a huge dent.” 

He adds: “Many workplaces now offer financial education and guidance to help employees understand how they can make the most of their finances now and for the future. Ultimately, empowering your people by providing them with access to appropriate support at the right time can result in better outcomes for all.”