Pension savers increased their average quarterly contributions by 63 per cent in Q1 2024 compared to Q4 2023, taking advantage of the end of the tax year, analysis from PensionBee has found.

The analysis revealed that female savers increased their average quarterly contribution by 60 per cent, from £873 in Q4 2023 to £1,395 in Q1 2024.

Meanwhile, male savers, who continued to contribute more than women during this period, raised their average contribution by 64 per cent from £1,242 to £2,038 in the same period.

In addition, self-employed savers raised their average quarterly contribution by 63 per cent from £1,121 in Q4 2023 to £1,822 in Q1 2024.

The proportion of savers making contributions remained consistent from Q4 2023 to Q1 2024, compared to the same period last year, but the average contribution value increased by over a quarter (27 per cent) from £1,384 in Q1 2023 to £1,762 in Q1 2024.

PensionBee suggested that the overall increase in pension contributions could be due to savers maximising tax relief, contributing up to their annual earnings into their pensions, or benefiting from the increased annual allowance, which rose from £40,000 to £60,000 in the 2023/24 tax year.

“It’s encouraging to see consumers increasing their pension contributions and taking advantage of the tax benefits associated with this,” PensionBee director of public affairs, Becky O’Connor, said.

O’Connor said that despite the “prolonged” cost of living pressures, the rise in the annual allowance threshold appears to have motivated pension savers to “prioritise” their pension contributions.

However, she pointed out that "as we look ahead to the election, the potential reinstatement of the lifetime allowance by Labour, if elected, could reshape the limitations of the annual allowance and tax penalties".

“Regardless of any change in government, the annual allowance must remain generous enough to incentivise consistent pension contributions, as this will enhance consumers’ quality of life at retirement," she added.

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