Pension saving can be achieved in a number of ways, but perhaps the most common is through the workplace arrangements. It is now the law for companies to enrol their eligible employees into a workplace pension in a process known as auto-enrolment. Auto-enrolment has pushed many more people into retirement saving through an opt-out policy.
It requires employers to put forward contributions to match those of their workers in an effort to help with retirement planning.
However, with many work plans changing as a result of the pandemic, pension saving could be under threat.
Many people are now considering part-time or more flexible working arrangements to suit their needs after COVID-19.
Indeed, others have been forced to reevaluate their working pattern either due to losing employment, or health needs.
Bearing this in mind, Express.co.uk spoke to Peter Glancy, Head of Policy, Pensions and Investments at Scottish Widows.
But before individuals even reach this point, there is an important consideration to bear in mind when it comes to auto-enrolment.
Failure to recognise the rules could mean Britons are left without any employer boost to their pension at all.
Mr Glancy continued: “There is another point which is perhaps less well known when it comes to going part-time.
“If you decide to take the move to go part-time, and your earnings drop below the trigger of £10,000 per annum, then you won’t be auto-enrolled at all.
“So you might lose 40 percent of your money if you go down to £10,500 in salary, but you’ll lose all of it if you go down below £10,000 – this presents a problem for people who have multiple jobs for reasons of flexibility.
“Even if these roles combine to form an income which is above the threshold, you still will not be auto-enrolled for either of those jobs.
“Neither of those jobs will help you to build up a pension pot and you could end up disappointed.”
Those who are earning more than what is known as the lower earnings limit, currently set at £6,240, can, however, ask to be auto-enrolled.
While employers may not always highlight the fact of auto-enrolment to these lower earners, it is still a possibility.
Once this is established, employers must auto-enrol and make contributions to a person’s pension as well.
Part-time and flexible work is, of course, becoming more common due to a number of reasons.
However, Mr Glancy concluded by stressing that an understanding of the system, and how the Government established it, is key.
He stated: “I think when the Government designed the system it was thinking about the very low paid people, people who are only earning £6,000 or £8,000, for instance, looking towards the state pension.
“The State Pension is about £9,000 nowadays, and when these people come to retire, they’re going to have a pension which is almost equivalent to their salary.
“But they’ve completely forgotten about modern lifestyles, and the fact that there are some people who have childcare responsibilities or caring duties are working part time.
“They’ve got quite big pension pots but may have to spend five or 10 years caring, or will have to carry out multiple part time jobs – because that’s just the way the labour market works nowadays. In this sense, it doesn’t really work for them.
“Many people need bigger pension pots, much larger than the state pension can provide.
“These people should always be asking to be auto-enrolled and keep their pots building.”