The percentage of employees who were members of a workplace pension remained flat last year according to Office of National Savings figures – the first year participation has stalled since the introduction of automatic enrolment in 2012.
However the figures show that in April 2020 nearly eight out of 10 (78 per cent) UK employees had a workplace pensions, compared with less than five out of 10 in 2012.
The ONS data shows the youngest employees outside the AE age eligibility were far less likely to have a pension, with just 20 per cent of 16- to 21-year olds members of a workplace scheme. This figure jumped to 80 per cent for those aged 22 to 29 years, who are automatically enrolled into their workplace pension.
The ONS figures show there is not a gender gap when it comes to membership, however full-time employees were 1.5 times more likely to have a pension than part-time employees. The data also shows that public sector full-time employees were substantially more likely to have a workplace pension than private sector employees, even in the lowest wage brackets.
Quilter pensions expert Ian Browne says: “Today’s statistics from the ONS continue to shine a light on how transformational AE has been in getting people to save for later life. However, these figures do illustrate that there remains a persistent gap in workplace pension participation between the public and private sectors.”
He adds: “This year marks the first time since the introduction of AE that overall participation has not improved. This may be due to more people feeling like that they need more money in their pocket today, or it could simply be that participation has hit a ceiling and unless other policy levers are pulled this figure is unlikely to budge.
“As the economic realities of the pandemic become clearer it will be interesting to see whether this figure remains flat or even drops if people’s finances are put under more strain.
“While these results are very encouraging, we must also start to think about how they can be replicated or tweaked to suit other types of workers such the self-employed, who continue to fall outside of the scope of AE.
“Research from the PPI shows that only 15 per cent of the 5 million self-employed people in the UK were saving into a private pension in 2019. Unfortunately, due to the nature of the last year, many self-employed people have suffered a significant financial shock and therefore are unlikely to be prioritising their pension provision at the moment. A solution to help prompt this group of workers to save for retirement needs to be looked at urgently as their financial needs differ to much of the rest of the working population.”