Financial wellbeing experts WEALTH at work say that while pensions can be one of the most valuable ways of saving for the future, many people don’t realise that saving just a bit more can make a significant difference to the overall size of their pension pot at retirement.

This comes at a time when confidence about retirement is falling. WEALTH at work’s annual retirement research* study last year found that the number of working people who believe they will never be able to afford to retire is on the rise. Due to the impact of the increased cost of living, almost half (45%) of workers claim they will never be able to afford to retire. This is up from two fifths (39%) in 2024 and a third (33%) in 2023.

Under automatic enrolment (AE) pension rules, most employers are required to enrol eligible employees into a workplace pension and make minimum contributions on their behalf. Currently, employers are required to make at least a 3% minimum contribution of an employee’s qualifying earnings, with employees contributing the remaining 5% to bring the total minimum pension contribution to 8%. Individuals should check the contributions they are making and consider whether they can afford to increase them. Depending on the pension arrangement in place, some employers will match any additional contributions above the minimum required level, which can make a big difference to long‑term retirement savings.

In fact,someone in their 20s, saving just 1% more each year into a workplace pension can boost future savings by 25% in retirement if their employer was to match this.

Example: If a basic rate taxpayer, aged 25, earning £20,000 per year increased their pension contribution by 1% of their salary and their employer matches this, the cost of take-home pay reduces by less than £12 per month (around £136 per year). If they then retire at age 68, the pension pot will have increased from £99,341 to £124,177 – a growth of 25%.

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.”

He 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.”

Watts-Lay 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.”

*Research for WEALTH at work was carried out by Opinion Matters throughout 08/05/25 – 13/05/25 amongst a panel of 2,000 UK workers, aged 18+ who have a defined contribution workplace pension.

**Assumptions: The employee is a member of a DC workplace pension scheme, the percentage contributions shown are paid with immediate effect and do not change in the future, pension contributions are paid by salary sacrifice by an employee based in England or Wales and are within HMRC limits, any pension savings already held by the employee are ignored, the member is exactly 25 years of age (their birthday is today), annual salary increases by 2.5% each year, pension charges of 0.75% apply, investment growth is 5% each year, the pension value is adjusted for inflation at 2.5% each year.