You are here: Home - Retirement - Retirement planning - News -

90% of workers are saving into a workplace pension

0
Written by:
05/06/2019
Brits saved £90.4bn in workplace pensions last year - up £7bn from 2017, government figures show.

In total, 87 per cent of eligible workers contributed to a workplace pension in 2018, up from 84 per cent the previous year.

The number of people who saved in a pension in at least three of the last four years declined marginally from 74 per cent to 72 per cent. Experts say this could be down to the small number of savers who opted out of auto-enrolment when the minimum contribution level went up from 2 per cent to 5 per cent in April 2018.

Public sector pension participation remains high at 93 per cent, an increase of 5 percentage points since 2012, according to the statistics from the Department for Work & Pensions.

But the largest increases in workplace pension saving have been within the private sector, where participation has risen by 42 per cent since 2012.

Tom Selby, senior analyst at AJ Bell, said: “The impact of automatic enrolment on pension saving has been truly staggering….This figure is likely to increase still further in 2019 as the rise in minimum contributions from 5 per cent to 8 per cent of relevant earnings kicks in.”

The figures show positive trends for small and micro employers, lower earners, part-time workers and younger employees.

Steven Cameron, pensions director at Aegon, said: “This shows that auto-enrolment is making a real difference for these employees – all of whom have historically been at risk of not saving for retirement.”

Most need to save more

However, the nation continues to face challenges when it comes to saving enough for retirement – and most workers are still not contributing enough.

Selby said: “When you consider auto-enrolment, minimum contributions are based on a band of earnings rather than your total salary packet, millions risk being short of cash in their later years unless they take action today.”

Figures from AJ Bell suggest a 25-year-old earning £30,000 who is paying in the minimum 8 per cent contribution could expect a pension fund worth less than £200,000 in today’s prices when they reach retirement. That would convert into an inflation-adjusted annuity income of around £7,000, far below most people’s retirement expectations.

“The choices facing people today are simple: pay more in now, retire later or have less money to spend when you stop working,” Selby added.

Self-employed abandoned

It is also important to consider the millions of self-employed workers who are excluded from auto-enrolment.

Cameron said: “The self-employed workforce, unlike employees, have seen a continuous decline in participation rates and participation has fallen from 27 per cent in 2008/09 to 15 per cent in 2017/18.

“The government needs to focus their attention on this large proportion of the workforce to make pension saving more attractive or many will risk being left behind and run out of funds in retirement.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Nationwide revamps savings range with member-only exclusives

The building society offers competitive rates for the high street – but they can be beaten online.
Nationwide revamps savings range with member-only exclusives

Universal Credit and other benefits to rise for first time in five years

People on Universal Credit and other working-age benefits will see their payments increase for the first time...
Universal Credit and other benefits to rise for first time in five years

Queen’s Speech confirms new pension rules

The Pension Dashboard, which will enable savers to view all their pension pots in one place, at the touch of a...
Queen’s Speech confirms new pension rules

Ryanair jetting towards US flights for £10

Ryanair is on course to achieve its long-held ambition of offering transatlantic flights to the US – and the...

Investing in car parks: a good vehicle for income seekers?

As the search for income continues, many investors are turning to alternatives, with car parks becoming increa...

A quick guide to guarantor loans – in association with Guarantor Loan Comparison

Considering a guarantor loan or becoming a guarantor yourself? Read our essential guide...

Results round-up: Companies to watch this week

Mulberry and more will face the music this week.

Product launches of the week

Select Property Group, Schroders, Leeds Building Society and more have exciting news this week.

Money Tips of the Week

Read previous post:
Woodford on trading suspension: ‘I’m extremely sorry’

Well-known fund manager Neil Woodford has apologised to investors after taking the decision to suspend trading on his flagship Woodford...

Close