Eligible employees saved a total of £90.3 billion into workplace pensions in 2017, an increase of £4.3 billion on the total amount saved in 2016, according to research by the Department for Work and Pensions (DWP).
Workplace pension participation and savings trends of eligible employees official statistics: 2007 to 2017, published on 5 June 2018, also found that 84% of eligible employees were participating in a workplace pension in 2017, and 73% had saved into workplace pensions in at least three of the last four years.
The research also found:
- 30% of workplace pension savings in 2017 were contributed by employees, 60% were contributed by employers, and 10% can be attributed to tax relief.
- 91% of eligible employees working in the energy and water sector participated in workplace pensions in 2017, compared to 69% of eligible employees who work in the agricultural and fishing industry.
- 89% of eligible employees who work in professional occupations contributed to a workplace pension in 2017, compared to 77% of eligible employees working in skilled trade occupations, such as plumbers, carpenters and welders.
- Participation in workplace pensions has increased the most for elementary occupations, for example security guards, postal employees and cleaners, rising from 20% in 2012 to 77% in 2017.
- The difference in workplace pension participation rates between the highest and lowest earning groups has narrowed from 52 percentage points in 2012 to 18 percentage points in 2017.
- 85% of eligible full-time employees participated in a workplace pension in 2017, compared with 78% of eligible part-time employees.
- In 2017, the highest workplace pension participation in private organisations was in the north east, with 82% of eligible employees contributing. The lowest participation for private organisations was Yorkshire and the Humber, with 80% of eligible employees contributing to their workplace pension.
- Workplace pension participation in the private sector has increased by 53 percentage points for eligible employees aged between 22 and 29, rising from 24% in 2012 to 77% in 2017.
- The Pakistani and Bangladeshi ethnic group has increased its workplace pension participation by 22 percentage points between 2011/12-2013/14 and 2014/15-2016/17, rising from 36% of eligible employees to 58%.
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.
“Persistency levels took a dip, but this is likely to be a quirk of the employees of the most recent [organisations] to have enrolled, as many small businesses rarely had a workplace pension in the past.”
Rona Train, partner and senior investment consultant at Hymans Robertson, added: “It’s brilliant to see [the] figures from the DWP revealing that 84% of eligible employees are now saving into a workplace pension. However, we shouldn’t fall into the trap of believing we’re out of the woods just yet. The truth is that many people are still not saving enough. While contribution levels of 8% may be okay for some, it will be woefully short of a decent retirement income for the majority. Therefore, it’s important that employers do not simply wipe their hands and say ‘job done’ when it comes to their pension responsibilities.
“Millions of pounds a year are going into master trust pension arrangements and it is vital that employers monitor that the specific needs of their members are being met, particularly as each master trusts’ proposition is evolving as they grow. Standards such as the master trust assurance framework look set [to] become crucial as employers look to choose the best vehicle for their members’ savings.”