Research from Hargreaves Lansdown has shown that employees under the age of 30 are the most likely to take advantage of an employer pension match to increase their monthly savings.
The company found that 49% of their employees decided to increase their contributions because of effective communications from pensions providers. Furthermore, 61% of people decided to save more within their pension when the employer offered to match the contribution.
Younger people appear to be more influenced by the offer of employers matching their pension contribution with one third opting to increase their savings, compared to just 18 percent of the over 50s.
Contribution matching also seems to have less appeal for those who have less in their pension pots. The research showed that those who have less than £5,000, when offered pension contribution matching, were not influenced by the extra savings. When an employee has saved more than £5,000, the study showed that the likelihood of them taking advantage of contribution matching increases by almost a third.
Nathan Long, Senior Analyst at Hargreaves Lansdown says, "It’s an approach used by some employers already and is particularly effective at incentivising the under 30s to pay more in."
Additionally, the pensions industry has been lobbying the government for an increase in the minimum contribution of 8% to rise to 12%. The government has already announced some changes, which are set to come in to motion in 2020. The changes include employees being automatically enrolled in to pension schemes from the age of 18 (lowering from 22) and that from the first pound an employee earns, they will be able to accrue contributions.
Following these changes, the pension pot for an average earner at the age of 68 is expected to grow from £150,893 to £220,791.