Forward thinking UK employers have signed up to a voluntary scheme that could give UK workers tens of thousands of pounds more in retirement – without staff paying in a penny extra.
The Living Pension scheme, run by the Living Wage Foundation, requires participating employers to contribute at least 7% of a worker’s salary into their pension pot. By comparison, the legal minimum employer contribution under auto-enrolment rules stands at 3%, with total minimum contributions set at 8% (5% from the employee and 3% from the employer).
The difference over a working lifetime is stark.
How much more could workers receive?
Take a 30-year-old earning £20,000 a year.
Under the legal minimum 8% total contribution, that worker could expect a pension pot of around £77,000 by retirement age, assuming investment growth of 3% annually and salary remaining constant in real terms.
But if their employer contributes 7% instead of 3%, the final pot could rise to £168,000 – an additional £91,000.
For someone earning £35,000, the projected retirement savings could increase from £161,000 to £294,000 – a £133,000 uplift.
For UK workers facing rising living costs, mortgage pressures and energy bills, the sums are significant. The Pensions and Lifetimes Savings Association says a single person needs £13,400 per year to achieve a minimum living standard in retirement. Yet the Living Wage Foundation reports that four in five workers are not saving enough to meet even basic needs later in life.
More than half of pensioners currently living in poverty are struggling with bills and credit commitments.
Who has signed up?
So far, 100 employers have committed to the Living Pension standard. They include major names such as:
- Aviva
- Everton Football Club
- NatWest Group
- SSE plc
- Phoenix Group
- Legal & General
Alongside them are housing associations, building societies, charities, financial services firms, colleges and community organisations across the UK – from the University of Salford to West Lothian College and Keep Britain Tidy.
The scheme remains voluntary. Employers must meet the 7% contribution level as a minimum standard and maintain broader good practice in pension provision.
Why this matters for UK workers
Auto-enrolment has undoubtedly increased pension participation since its introduction. But contribution levels remain a live issue.
For a worker earning £20,000, the difference between a 3% and 7% employer contribution could determine whether retirement means scraping by or maintaining a modest but stable standard of living.
At The Workers Union, we regularly hear from members concerned about long-term financial security, particularly those in lower-paid sectors where employer contributions often remain at the statutory minimum.
The Living Pension model shifts more responsibility onto employers to strengthen long-term outcomes – without increasing employee deductions. In practical terms, that could mean thousands more in compound growth over decades.
The wider economic backdrop
This move comes at a time when UK households are balancing wage growth against persistent cost pressures. While state pension provision offers a foundation, workplace pensions are increasingly central to retirement planning.
What should workers do?
Workers should:
- Check their current employer contribution rate.
- Review annual pension statements.
- Ask HR whether the employer plans to adopt the Living Pension standard.
- Consider independent financial guidance where appropriate.
For employers, participation may increasingly become a marker of responsible practice and long-term workforce investment.
For UK workers, the message is simple: pension contributions made today shape financial security decades from now.
As more employers sign up, the Living Pension scheme could become a significant factor in recruitment, retention and retirement readiness across the country.
