More young people saving into a pension due to auto-enrolment.
A report by The Pensions Regulator (TPR) shows there has been an increase in saving among employees of small and micro businesses compared to before the start of the reforms.
In addition, workplace saving among non-eligible staff has nearly doubled with numbers of staff asking their employer to join a scheme increasing from 16 per cent in 2012/13 to 30 per cent in 2017/18.
Guy Opperman, minister for pensions and financial inclusion, said: “It’s great to see a whole new generation of workers in big and small businesses putting money away and planning for a more secure future. The progress we’ve made towards eliminating the gender gap in pension saving is hugely encouraging.
“Automatic enrolment has transformed pension saving and boosted the retirement prospects of millions of people, and we’ll make sure that even more can benefit from workplace pensions.”
The TPR report, which has been published annually since the start of automatic enrolment in 2012, found that between the introduction of the reforms in 2012 and April 2018, the overall proportion of eligible staff saving into a workplace pension increased from 55 per cent to 87 per cent.
The annual amount saved by eligible savers was £90.4bn in 2018 – an increase of £16.8bn on the total amount saved in 2012, and an increase of £7bn over 2017.
The largest increases in participation have been seen amongst eligible employees in the youngest age groups. In the private sector, the largest increase was seen in 22 to 29-year-olds – increasing from 24 per cent in 2012 to 84 per cent in 2018.
However, Steve Webb, director of policy at Royal London, said the report also showed a worrying decline in employer awareness of automatic enrolment.
Under the legislation, employers have five key duties but the report shows that only 82 per cent of ‘micro’ employers are aware of all five duties, compared with 88 per cent a year earlier. Awareness among medium sized employers was also down, from 98 per cent to 94 per cent.
“Automatic enrolment has been a huge success story, but it is vital that the momentum is maintained. It is worrying that growing numbers of micro and medium sized firms are not fully aware of their duties under the law,” said Webb, “There is a risk that this will lead to workers missing out. The government must sustain publicity around automatic enrolment, especially targeted at employers, if the programme is to continue to be a success.”