New analysis from leading online pension provider, PensionBee, reveals that pension savers increased contributions by over a third (33%) from July to September 2023, compared to the same period the year prior, despite enduring levels of high inflation. The average quarterly contribution amount of PensionBee customers increased from £776 in Q3 2022 to £1,034 in Q3 2023.
Female versus male saver contribution amounts
While, on average, male savers contributed more to their pensions compared to females over the period, with average contributions up 29% from £900 to £1,163, the quarterly contributions from female customers grew by a bigger 44%, from £597 in Q3 2022 to £861 in Q3 2023.
Self-employed versus employed contributions
In general, self-employed savers struggled to boost their pensions as much as their employed counterparts in the third quarter. The average quarterly contribution amount for employed savers increased by 46%, from £703 in Q3 2022 to £1,026 in 2023, while self-employed savers’ contributions only increased by 16% in the same period, from £938 to £1,085.
Why have contributions risen?
Additional research undertaken by PensionBee found that among people who had increased their pension contributions in the past year, the most common reason was due to receiving a salary increase (67%). This could be attributed to recent wage rises across the UK, with the ONS reporting employees’ average annual growth in regular pay was 7.7% from July to September 2023 (1).
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%). This could suggest increasing awareness of the importance of retirement planning and growing understanding that pensions are a valuable workplace benefit.
Becky O’Connor, Director of Public Affairs at PensionBee, commented: “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.”
Appendix
Table 1: Average quarterly pension contribution amounts by gender from Q3 2022 to Q3 2023
| Overall | Male customers | Female customers | |
|---|---|---|---|
| Q3 2022 | £776 | £900 | £597 |
| Q3 2023 | £1,034 | £1,163 | £861 |
| Growth | 33% | 29% | 44% |
Source: PensionBee, November 2023. Based on 223,000 Invested Customers as at 30 September 2023. Rounded to whole numbers.
Table 2: Average quarterly pension contribution amounts by employment status from Q3 2022 to Q3 2023
| Overall | Employed customers | Self-employed customers | |
|---|---|---|---|
| Q3 2022 | £776 | £703 | £938 |
| Q3 2023 | £1,034 | £1,026 | £1,085 |
| Growth | 33% | 46% | 16% |
Source: PensionBee, November 2023. Based on 223,000 Invested Customers as at 30 September 2023. Rounded to whole numbers.
Table 3: Why have you increased pension contributions this year?
| Responses | Percentage |
|---|---|
| My salary has increased | 67% |
| My employer offers matched pension contributions | 23% |
| I’ve made a conscious effort to prioritise my pension above other long term financial goals | 16% |
| I’m concerned about rising living costs | 12% |
| I want to maximise the tax benefits associated with higher pension contributions | 9% |
| I’m more aware of / engaged with my pension now I am nearing retirement age | 7% |
| I received a lump sum payment which I decided to put in my pension | 6% |
| I’m concerned about my State Pension entitlement / the level of support it will provide | 5% |
| I received advice from a financial adviser | 3% |
| I want to retire earlier than I previously expected | 2% |
Source: PensionBee, November 2023. Based on 1,000 responses from a nationally representative sample of UK consumers aged 18 to 64. Respondents were able to select multiple answers.
Footnotes
