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Savings

On average, people are living longer. To ensure we are able to pay for a longer retirement, we will need to save more for life after work.

The Government and regulators have made changes in recent years to help more people save, especially at work through the introduction of automatic enrolment. Insurance and long-term savings providers are part of these changes and offer pensions and other products to help you save for retirement.

Find out more about: automatic enrolment, incentives to save, keeping track of your pensions.

Benefits of savings into a pension

The state provides a basic pension in retirement, but most people will need to save money on top of this to enjoy the same standard of living in retirement as they had while they were working.

Pension schemes are available through your employer (workplace pensions). A workplace pension scheme will be one of two types – a defined benefit pension scheme or a defined contribution pension scheme. Your regular contributions are invested so that they grow throughout your career and then provide you with money that you can convert to an income in retirement.

If you are self-employed or are not working, you can set up your own personal pension. A personal pension will always be a defined contribution scheme.

Your regular contributions are invested so that they grow throughout your career and then provide you with money that you can live off in retirement.

Pensions have a number of benefits that help you to save more for retirement, which are set out below:

  • Tax relief tops up your pension pot

If you put money into a personal pension scheme, it qualifies for tax relief. This means that as well as the money you’re putting in, some of your money that would have gone to the government as tax now goes into your pension pot instead.

  • Employer contributions

Under automatic enrolment employers are required to enroll their workers into a workplace pension scheme. Once enrolled into a workplace pension scheme, employers also have to pay a minimum contribution into your pension pot. To work out how much your employer will pay in you can use the government’s employer contribution calculator

Keeping track of your pensions

Insurers are committed to keeping in contact with their customers about their pensions, long-term savings or life insurance products.

  • The ABI keeps a register of consolidations, which can be accessed here, to help customers to identify who is managing their pension and insurance policy where the original company has been acquired.
  • The ABI has been leading a project to build a prototype pensions dashboard – these dashboards will help you view all of your pensions together online to help you make decisions about your savings and retirement.

Reconnecting with gone-away customers

The Association of British Insurers is stepping up efforts to re-connect consumers with their lost nest eggs by launching a framework to help find “gone-away” customers. Providers are committed to maintaining contact with their customers in order to keep them informed of critical events within the lifecycle of their policies and ensure that the benefits of the policies can be paid to the customers when due. However, the long-term nature of many of these products presents challenges for firms in maintaining contact and engagement with customers; particularly when customers change address and do not notify the provider. With the average Brit moving house 8 times in their life it is very easy for pension and insurance providers to lose contact with customers who do not inform them of their new address.

This ABI Framework for the Management of ‘Gone- Away’ Customers in the Life and Pensions Market is designed to help firms operating in the life and long-term savings market to better identify, trace, verify and manage those customers with whom they have lost contact to assist them in re-engaging with such customers in a timely manner. The framework can be viewed here.

Automatic enrolment

The Automatic Enrolment Programme was introduced in 2012 and requires every employer to automatically enrol their employees into a workplace pension.  Your employer will automatically enrol you into a pension scheme and make contributions to your pension every payday if, you’re aged between 22 and State Pension age and you earn at least £10,000 per year in your job. The government also provides an incentive to save into a pension in the form of tax relief.

You can opt out of automatic enrolment but this means you will not be saving into your workplace pension scheme and will be missing out on both the money from your employer contributions and the tax relief from the government.

Automatic enrolment does not currently apply to self-employed individuals, younger and older workers, workers on lower incomes, and multiple job holders, if you fall into one of these groups you may wish to consider setting up a personal pension to save for your retirement.

If you are an employer, the ABI’s members offer a number of Automatic Enrolment solutions which may meet your needs.

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