AXA launches Save More Tomorrow pension scheme

by Gill Montia

Story link: AXA launches Save More Tomorrow pension scheme

AXA has launched a new type of company pension scheme called Save More Tomorrow, which it hopes will help address the lack of adequate retirement provision faced by many people in the UK workforce.

As the name indicates, contributions are increased automatically over the life of the plan.

According to research, around 12 million workers are not saving enough for their retirement but when questioned, 68% of workers said they feel they should save more.

However, only 14% actually get around to increasing their contributions.

According to AXA, the benefit of the Save More Tomorrow scheme is that it allows members to gradually increase their contribution over a number of years.

The rise is automatic and where it can be tied in with an annual pay rise, the impact on personal finances can be lessened.

To illustrate the potential of the new scheme AXA gives the example of a 20-year-old earning £20,000 per annum.

Setting out with a pension contribution of 5% per annum, a Save More Tomorrow plan member could amass £627,000 (at a 7% growth rate) over their working life.

The pension pot compares with a fund of £402,000 based on flat contributions for the same employee, at 7% growth rate.