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More than £20bn ploughed into personal pensions last year

Written by: Paloma Kubiak
More than £20bn was contributed to personal pensions in 2014/15 up from the previous year but the numbers of self-employed paying into a scheme has continued to decline.

New personal pension statistics from HM Revenue & Customs revealed £20.3bn was contributed to a personal pension in the previous tax year, higher than the £18.4bn accrued in 2013/14.

The data, which looked at defined contribution arrangements between an individual and a pension provider, rather than a state or occupational pension, also found that more than 6 million paid into a scheme in 2013/14, up from the 5.3 million in 2011/12.

Contributions by the under 24 and 25-34 age groups have also been increased by auto-enrolment, with this group making up about 30% of contributors – up from the 20% in the previous year.

Employers’ contributions have also risen dramatically, from 1990/91 when it stood at 9%, but the latest figures show this is now 54% in 2014/15, slightly down from the 56% recorded in 2013/14.

However, while average annual contributions per person grew consistently up to 2011/12 at £3,690, this figure’s fallen to £2,840 in the 2013/14 financial year.

And worryingly, the share of individual contributions by self-employed people continues to fall.

In 2013/14 there were more men in each age group contributing to personal pensions than women, with an overall gender split of about 37% females and 63% males.

Turning to contributions based on geography, the highest proportion came from London and the South East of England at almost 14%, while the North East shows the lowest participation, at around 11% of adults.

Overall encouraging statistics

Jon Greer, pensions technical expert at Old Mutual Wealth, said: “Those under the age of 35 now make up a larger percentage of those contributing to personal pensions than before which is encouraging to see. The danger here is that any radical change announced at the Budget puts the brakes on this new-found enthusiasm for saving into a pension.

“While it is encouraging that more young people are saving into a pension and overall contributions are on the rise, there are a couple of areas of concern. The decline in pension savings among the self-employed is a worry. Entrepreneurs and wealth-creators are crucial to the future prosperity of the UK, but it is important they find a way to build a nest-egg to go alongside the investment they make in their own business.”

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