How flexible working could affect your pension

Flexible working may have a permanent effect on how we save for retirement, says David Prosser.

Woman holding a baby
More flexible working may help mothers save for retirement
(Image credit: © Getty Images)

As the UK continues to ease Covid-19 lockdown restrictions and more employees return to work, the debate about the future of work goes on. If the move to more flexible arrangements continues, the impact on retirement planning could be greater than expected.

The most obvious point is that if people work fewer hours – because they choose to shift to part-time working, for example – they will almost certainly be paying less into their pension. Under the auto-enrolment pensions system, both employees and employers have to pay a minimum percentage of pay into pensions. If your earnings reduce, so will the cash going into your savings. Inevitably, that means a smaller pension fund when you reach retirement.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.