Increasing the minimum auto-enrolment (AE) contributions could boost savers’ pension pots by £217,000, analysis from Standard Life has revealed.

The research showed that someone who began working full-time with a salary of £25,000 per year, and paid the current minimum monthly AE contributions from the age of 22, could amass a total retirement fund of £434,000 at the age of 66, not adjusted for inflation.

However, with standard AE pensions from 8% to 12%, shared equally by the employer and employee from the age of 22, savers could accumulate as much as £651,000 by the age of 66, marking a £217,000 increase compared to the current standard contributions.

Standard Life suggested that extending AE could have a potentially “transformational” impact over the course of a career.

Phoenix Insights head of research analysis, Patrick Thomson, commented: “AE has been an important policy to boost pension participation, but the current minimum rate is unlikely to provide most people with enough savings to achieve the income in retirement that they want or expect.

“Engagement with pensions is low and there is a risk that people are lulled into a false sense of security that the statutory contribution rate will provide enough savings for their retirement needs.

“We hope the Government’s review of pension adequacy will pave the way for an increase to minimum contributions when the economic conditions are right.”

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