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Top up your pension when children fly the nest, experts advise 

Top up your pension when children fly the nest and you have paid off your mortgage, experts advise

Pension savers should be nudged to increase their contributions at key life stages, such as when they get a pay rise, when their children leave home and when they have paid off their mortgage, an economic think-tank has urged.

Automatic enrolment into workplace pension schemes does not currently encourage contribution rates that rise with age, the Institute for Fiscal Studies (IFS) says.

It argues for a focus on policies that increase retirement saving at the best times, especially at older ages when most people’s earnings are higher. 

Automatic enrolment into workplace pension schemes does not currently encourage contribution rates that rise with age, the Institute for Fiscal Studies says

Parents would also be expected to save more for retirement after their children have left home and expenses are lower.

The IFS says default employee contribution rates that rise with age, and increases triggered by pay rises, should be considered.

There could also be nudges when children leave home or when people finish debt repayments such as mortgages, the IFS says.

For a graduate with two children, IFS modelling suggests they should raise their pension contributions from about 5 per cent of pay to between 15 per cent and 25 per cent after the children leave home.

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