More people saving in workplace pension but amounts at record lows
As of April 2018, there were more than 9.6 million workers auto-enrolled, according to figures from the Department for Work & Pensions (DWP).
Some 84% of eligible employees participated in a workplace pension in 2017, up from the 77% the year before.
The number of eligible employees saving in a workplace pension in at least three of the last four years stood at 73% in 2017, a fall of 4% on the number reported in 2016.
The DWP revealed that the total amount saved in 2017 by eligible savers was £90.3bn, an increase of £4.3bn from the year earlier.
However, the data also revealed that the annual amount saved per eligible saver in the private sector in 2017 fell to a record low of £3,873. It was at its highest in 2012, standing at £6,782.
On the public sector side, the average amount saved per eligible saver was £8,414 in 2017, slightly up on the £8,404 recorded in 2016.
Overall, for all employees (private and public), the amount stands at £5,110, the lowest amount on record.
Workplace pension participation was highest in the energy and water sector (91%) and lowest in agriculture and fishing (69%).
Those in professional occupations had a higher participation rate (89%) compared to those in the lowest skilled trade occupations (such as plumber, carpenter, welder) with a rate of 77%.
The highest earners (those earning over £40,000) and full time workers are more likely to pay into a pension but the gap between the highest and lowest earners has narrowed each year since the introduction of auto-enrolment in 2012.
Regionally, more people in Wales are paying into a pension scheme (95%) while the lowest participation rate is in the East (86%).
Overall in 2017, contributions by employees accounted for 30% of saving, with employer contributions accounting for 60%, and tax relief the remaining 10%.
‘Very low savings levels’
Nathan Long, senior pension analyst at Hargreaves Lansdown, said: “The number of people saving for retirement continues to soar, although the amounts being put aside are plunging. The government’s auto-enrolment regime is responsible, as it throws first time savers into a pension although it currently insists on only very low saving levels.
“Young people are the biggest winners from the rules as their money works harder for them from a much younger age. The first increase in the minimum saving levels happened in April and will rise again in April next year, by then the picture should be looking far rosier.”
Maike Currie, investment director for Fidelity International, said: “Saving into a pension is incredibly important if you want to have enough money to live comfortably in retirement, and so it’s good news that participation in workplace pensions is on the up. Auto-enrolment has played a significant role in helping to level the playing field by making sure everyone has the ability to save into a pension. However, more work still needs to be done to encourage workers to stay enrolled. This is especially important for women who often retire with much smaller pension pots than their male counterparts.”