The number of employees saving into a workplace pension increased last year according to new government figures, with the frozen earnings trigger bringing more workers into the AE net.
However, the data shows that the number of new savers opting out of workplace pensions is also rising, with almost one in 10 opting not to join their workplace scheme. Advisers say this reflects the ongoing cost-of-living pressures, particularly on younger employees in the workplace.
The DWP’s Workplace pension participation and savings trends: 2009 to 2024 shows that 1.7m employees saved into workplace pensions in 2024, an increase of 0.8m on the previous year.
These figures mean that 89 per cent of eligible employees now save into a workplace pension.
The DWP says this is a more substantial increase in AE savers than has been seen in previous years. It attributes this to the fact that the earnings trigger of £10,000 has remained level in recent years, while earnings have risen. Changes made by the Office of National Statistics to the data now estimate a greater number of higher earners who are more likely to be saving into a workplace pension.
However, the data also showed that the number of new savers opting out of their pension contributions reached 9.9 per cent in Q3 2024–25, reflecting how the continued cost-of-living pressures are impacting pension saving.
Broadstone head of policy David Brooks said: “While the DWP’s annual publication of workplace pension saving paints a rosy picture with strong and growing participation among eligible employees, there remains cause for concern.
“One in 10 new savers are opting out of their pensions, demonstrating the ongoing battle between longer-term saving and immediate budgetary constraints.
“The findings released alongside the launch of the Pensions Commission show that nearly 15 million people are under-saving for retirement, and nearly half (45 per cent) of working-age adults are saving nothing at all into a pension, with lower earners, the self-employed and some ethnic minorities particularly at risk.
“The Commission demonstrates the Government’s commitment to reversing inadequate saving and serious inequality within the pensions system. We look forward to working together with the industry so that we can focus on achieving our objective of delivering the best outcomes for the highest number of people in later life.”
L&G CEO DC and workplace savings Paula Llewellyn adds: “It’s encouraging to see more people opting into their workplace pension, with an increase of 800,000 employees saving in 2024 compared to 2023 despite inflation and the cost-of-living squeeze.
“But saving something isn’t the same as saving enough. Our research shows 22 per cent of retirees live on less than £1,000 a month – around £100 below Pensions UK’s (formerly the PLSA) minimum amount needed to cover essential costs
“Starting early could make all the difference. If the Government lowered the auto-enrolment age from 22 to 18, the average person could be 15 per cent better off at retirement. The powers are already there, and countries like Australia and Canada have shown it works. It’s time for action, not just engagement. We need to make it easier for people to start saving earlier and set them on track for a stronger financial future.”
