But the DWP’s annual report on employee participation in workplace pensions found that in 2017, 73 per cent of eligible employees had saved into a workplace pension in at least three of the last four years, a fall in persistency of 4 percentage points on this measure since 2016.
The annual total amount saved by eligible savers rose £4.3bn over 2017 to £90.3bn. The figures do not cover the April 2018 increase in auto-enrolment contributions.
The largest increases in workplace pension saving have been seen within the private sector. Since 2012 private sector participation has risen by 39 per cent to 81 per cent of private sector eligible employees participating, covering 12.9 million employees, in 2017.
Those earning over £40,000 continue to have the highest participation levels in both the public and the private sectors. In 2017, 95 per cent of eligible public sector highest earning employees were participating in a workplace pension and 90 per cent in the private sector.
In the private sector, pension participation had been falling across all age bands until 2013, where all groups showed an increase. Again the largest increase was seen in the 22 to 29 age group, increasing from 24 per cent in 2012 to 77 per cent in 2017, a 53 percentage point rise. All other age groups have also shown significant increases over this period too, those aged 30 to 39 increased by 39 percentage points.
AJ Bell senior analyst Tom Selby says: “The small dip in the persistency of saving – defined as eligible employees saving in a workplace pension in at least three of the last four years – is potentially worrying, while it is clear the amount people are on average contributing to their retirement pots will need to increase.”
Aviva head of savings & retirement Alistair McQueen says:“Automatic enrolment has brought workplace pensions to record numbers of workers. However, it is increasingly clear that ‘minimum’ savings levels are becoming the norm for millions of savers – especially the young workforce.
“But the minimum level is insufficient to achieve the income in retirement that we aspire to, leading those under-30 towards a shortfall of £100 every week in retirement.
“We must continue to promote the need to save, but the need to accelerate the increase in minimum savings levels is becoming more urgent. The minimum is set to reach 8 per cent of earnings from April 2019. Aviva advocates that this needs to rise to at least 12.5 per cent of earnings by 2028.”
Equiniti Pensions propositions and solutions directorChris Connelly says:“Despite the progress being made, there is cause for concern about the level of savings made by people early in their careers, millennials – aged 25-34 – are the only group whose collective pension wealth has actually been falling in recent years. It is crucial people of all ages do not consider auto-enrolment to be ‘job done’ and think that they can disengage from later life saving.
“Hopefully the contribution increase to 5 per cent from April 2018 and then 8 per cent from April 2019 will not put a dent in these changing attitudes among employees and that schemes can engage with their members to cement the truly revolutionary effect that auto-enrolment is having on pension saving attitudes in the UK.”
