The majority of the population will benefit from auto-enrolment into occupational pensions under 2012 pension reforms, according to a government report.
The Department for Work and Pensions (DWP) study, shows that even after taking inflation into account, over 95% of people will get back more than put in.
Furthermore, 70% of pension savers can expect to get back more than twice what they put in, according to the Savings for retirement: implication of pensions reforms on financial incentives to save for retirement report.
The study looked at the impact on those making savings into a defined contribution pension after 2012, with an employer contribution.
Pensions minister Rosie Winterton said: “This report makes clear that most people can expect their savings to make them better on in retirement. Rather than putting your money under a mattress sensible saving is about making your money work harder for you, whether it is in a pension or in other ways.
“Even after inflation, virtually everyone can expect to get back more than they put away. The research confirms that we are absolutely right in moving forward with the recommendations of the Turner Commission and the decision to introduce auto-enrolment in 2012.”
Laith Khalaf, pensions analyst at Hargreaves Lansdowne, said a small proportion of workers will find that by saving they are simply replacing means-tested benefits they would have received anyway, but these are by far the minority.
“There would be millions of people reaching retirement with empty pockets if the government had sat on its hands. The means-testing system itself is not immutable and will evolve over time; it is not sensible for people to rely on this system being in place in 10 or 20 years time,” he said.
Meanwhile Maggie Craig, the ABI’s director of life and savings, said the government should encourage auto enrolment without delay.
She said: “This report shows that saving pays – we urge the Government to make it easier for people to reap the benefits of saving now.”