Salary increases trigger rise in pension contributions

Pension contributions saw a 33% year-on-year increase in Q3 2023, despite savers enduring levels of high inflation during this period, research from PensionBee has revealed.

The group revealed that PensionBee customers’ average quarterly pension contribution increased from £776 in Q3 2022 to £1,034 in Q3 2023.

In addition to this, the latest figures showed that while male savers contributed more to their pensions on average compared to women, female customers reported a bigger year-on-year increase in pension contributions.

In particular, PensionBee showed that while the average contribution amongst male customers was up 29%, from £900 to £1,163, the quarterly contributions from female customers grew by 44%, from £597 in Q3 2022 to £861 in Q3 2023.

Wage growth was key to this, as PensionBee found that over two thirds (67%) of those who had increased their pension contributions in the past year did so as a result of receiving a salary increase.

Other popular responses for increased pension contributions included employers offering matched pension contributions (23%) and generally making a conscious effort over the last year to prioritise their pension above other long-term financial goals (16%).

However, the same improvements were not seen amongst the self-employed, as PensionBee found that, in general, self-employed savers struggled to boost their pensions as much as their employed counterparts in the third quarter.

PensionBee found that the average quarterly contribution amount for employed savers increased by 46%, while self-employed savers’ contributions only increased by 16% in the same period, from £938 to £1,085.

Director of public affairs at PensionBee, Becky O’Connor, stated: “This data suggests pensions are a financial priority for many people. Despite hard times, many savers earnestly want to boost their retirement prospects and are willing to follow through with action.

“Decisions to increase contributions appear to be more likely during times of personal good fortune, such as when someone receives a pay rise or because of generous employer matching.

“There is also evidence that greater understanding of the benefits of pensions can be motivating and somewhat counter-intuitively, the cost of living crisis appears to have encouraged some people to consider their future financial resilience and this has nudged them into increasing contributions.”

Share Story:

Recent Stories

The later life lending landscape
Michael Griffiths speaks to Darren Deacon and Stuart Heavens from Family Building Society about the current state of play in the later life lending market

Mortgage Insider Podcast


Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.