For a long time, we at Altor, have been big fans of the ‘Save More Tomorrow’ concept.
It was developed by the behavioural economists Richard Thaler and Shlomo Benartzi 25 plus years ago and it has gone on to help millions of Americans save more into pensions in a painless way.
It works by asking employees to opt into increasing their pensions in the future, which is less painful psychologically than agreeing to increase now. Even better than that, it works by saying that the increase will happen when you next receive a pay rise.
So the commitment now is only to turn your future pay rise of, say, 4% into a 3% pay rise and a 1% increase to your pension contribution.
All the evidence suggests that this is a great way to automatically increase your pension contributions. Over two million people have watched the following short TED talk from Shlomo about how it works:
We first suggested that Phoenix introduce this option within the workplace pension scheme pre-pandemic and we are pleased to say that they have now done so.
This brilliant scheme is available for you to opt-into now. Take up so far is surprising low and so we will be encouraging all staff to look seriously at this at every opportunity we have.
We know that the average person is not saving enough into a pension to pay for their retirement. Phoenix already puts you as a staff member ahead of this average person, a contributuon of 12% is well above average for a company contribution in the UK.
12% + 2% of salary might still not be enough for you though,here is a good guideto what you need to build up in your pension.
If you are still not sure how much you need to contribute to your own workplace pension, opt into our cashflow service via your employee benefits program paid via tax efficient salary sacrifice.
