New ONS figures show that since 2012, and the start of auto-enrolment, an additional 9.8m people have been enrolled into workplace pension schemes. However over this period, contribution levels of have fallen from a high of 9.7 per cent of salary (in 2012) to just 3.4 per cent in 2017.
Today’s figures show that this now includes an average employer payment of just 2.1 per cent.
Aviva is calling for the minimum contribution level to be raised to at least 12.5 per cent by 2028 – shared by the employer, employee and government.
Meanwhile the TUC’s general secretary Frances O’Grady called for employers to pull their weight. She says: “It is shocking that average employer payments into private sector DC pensions are a miserly 2.1 per cent, and falling.
“The Government must raise the bar by setting out a long-term path to higher minimum contributions.”
Aviva points out that for a typical 22-year old, these minimum contribution levels would put them on track for an income equivalent to just £6.55 an hour in retirement – significantly less than today’s minimum wage.
Aviva’s head of savings and retirement, Alistair McQueen adds: “To their credit millions of employees have embraced AE since 2012 in the belief that it will deliver a comfortable retirement. But based on today’s data they are in for a shock.”