24 January 2024 , 13:54
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Martin Lewis has shared the "one rule" everyone who has a pension needs to follow.
The MoneySavingExpert.com founder shared the advice on pensions during a live caller phone-in on ITV This Morning earlier this week. One caller, introduced by presenters Sian Welby and co-host Dermot O'Leary, asked Martin how much money she should be paying into her pension.
Martin told the caller that the sooner they start paying money into their pension pots, the better. He then urged Brits to "put a bit more" money into their pensions when and where they can throughout their lives. He explained: "What I will say is you need to put in 18.5% of your earnings, that's what your company puts in and what you put in.
"Now, nobody does that. So anybody listening, don't worry, it's fine, but the earlier you start, the better. Whenever you get a pay rise, let's say you got a pay rise, put a quarter of it into a pension before you get used to it. Try and push up your contributions where you can."
Martin has shared this advice before and goes into further detail on his MSE website. On the website, the MSE team explain how you can work out what percentage of your salary you should be putting aside in your pension - with the "basic" advice being "put in as much as possible, as early as possible". However, the "rule of thumb" with pension contributions is to: Take your age when you started saving in a pension - and halve it.
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The MSE team wrote: “There's a rule of thumb for what to contribute for a comfortable retirement. Take the age you start a pension and halve it. Then aim to put this % of your pre-tax salary into your pension each year until you retire.
"So someone starting aged 32 should contribute 16% of their salary for the rest of their working life. Don't worry, almost nobody reaches this amount, but the real takeaway is to start as early as possible with whatever you can, as you've longer for the gains to compound."