Webb: tide finally turning on retirement saving
Figures released last week from the Office for National Statistics indicate that after decades of decline, the tide is finally turning and people are embracing pension saving.
Most striking among the figures is that participation in pensions increased in 2013 for the first time since 2006 and represented the largest rise since records began in 1997.
To have a decent income in retirement the key is to start early
In April 2013, 50 per cent of all employees were a member of a pension scheme. This is a rise from 47 per cent the previous year.
In the private sector the increase in those saving is staggering, with 51 per cent of employees in the largest companies, a jump from 36 per cent in 2012.
This reflects the fact that those companies with more than 5,000 employees were the first to meet their auto-enrolment duties.
We know that to have a decent income in retirement the key is to start early. Those under age 30 are less likely to be members of a workplace pension scheme than all other age bands, except those aged 65 and over.
However, there has now been a significant increase in pension participation for this age group.
Early Department for Work and Pensions research showed young people were less likely to opt out than any other age group, and this is backed up by the significant increase in participation for people under the age of 30.
In 2013, 37 per cent of 22 to 29-year-old employees were members of a workplace pension, compared with 31 per cent in 2012, the largest increase for any age band.
By getting young people paying into a pension we truly can create a culture of saving that will see them through retirement.
But these figures only tell a fraction of the story. They were collected back in April 2013 when auto-enrolment was in its infancy, having been running for just six months. Back then the number of those enrolled stood at just 500,000.
The latest figures, released last week by the Pensions Regulator, show this has soared to 3.2m.
Auto-enrolment is proving to be a government success story, but it’s one we cannot continue to achieve without the work of the pensions and payroll industries. So we need to be prepared for the increase in employers staging throughout the summer.
And we are doing our bit to help the process – our improvements to the auto-enrolment joining window come into force on April 1.
I fully expect that when we look again at the ONS tables next year, 2013's record rises will be dwarfed by the millions more that are saving into pensions.
Steve Webb is the UK's pensions minister