Workplace pension numbers hit record high

The most recent data published by the Office for National Statistics on Wednesday showed 77 per cent of UK employees were members of a workplace pension scheme last year.

This is a significant jump from 47 per cent in 2012 when automatic enrolment was first introduced.

It is the highest membership rate since records began in 1997 and is equivalent to about 21.9m people, mostly saving into defined contribution pensions.

According to the ONS, more employees were members of a DC scheme, at 36 per cent, than any other for the first time in 2019.

But Alistair McQueen, head of savings and retirement at Aviva, said the industry should not be blinded by the figures.

Aviva warned about 5m employees were still not in any workplace pension scheme, usually as a result of earning below £10,000 or being aged under the auto-enrolment qualification of 22. Another 5m self-employed workers were excluded from auto-enrolment altogether.

Mr McQueen said: “We must not let today’s headline figures convince us that our work is done. While a record number are saving in pensions, millions are still saving at inadequate levels, and many are missing out altogether – either because they are too young, low earners or self-employed.

“Auto-enrolment must be celebrated for bringing many more people into pension saving, but we mustn’t be complacent.”

Tom Selby, senior analyst at AJ Bell, said: “While many will lament the slow death of defined benefit, DC is the future of retirement saving in the UK and the focus needs to be on making this avenue as attractive as possible for savers.”

Mr Selby said it was “unclear” what the future held for auto-enrolment reforms, with little update from the government on proposals made in 2017 for qualifying earnings bands to be scrapped, and called for a pensions commission.

He added: “Although the government has other, more pressing issues to address at the moment, not least the coronavirus outbreak, setting a course for the future of auto-enrolment and pension saving more generally is crucial to build on the early successes of the reforms.”