On the go: Auto-enrolment continues to motor ahead with £90.4bn saved in workplace pensions last year, up £7bn from 2017, according to recent figures published by the Department for Work and Pensions.
In the private sector, participation among employees has doubled in just six years, according to the DWP’s new research, with 87 per cent of eligible employees saving for retirement in a workplace pension in 2018.
Even retention rates are holding up, with the number of people who have saved into a pension in at least three of the past four years declining only marginally to 72 per cent from 74 per cent in 2017.
Another marker of auto-enrolment’s success is that the largest increase in participation was in the age-22 to 29 bracket, where 90 per cent of eligible employees were participating in a workplace pension in 2018. This is a rise of nearly 11 percentage points since 2012.
The amount saved into workplace pensions is likely to increase further in 2019 as the rise in minimum contributions from 5 per cent to 8 per cent of relevant earnings kicks in, pointed out Tom Selby, senior analyst at AJ Bell.
But there are also disturbing gaps in coverage. Mr Selby highlighted that not everyone is covered by auto-enrolment, with around 5m self-employed people excluded from the reforms.
“Employed people earning less than £10,000 are also not eligible to be auto-enrolled, although they can actively opt-in to their workplace scheme,” he said.
Mr Selby added: “If they do and they are in a scheme which deducts contributions from their net pay, they risk missing out on the pension tax relief they are owed. This is also the case for anyone earning below the £12,500 personal allowance.
“Addressing this net pay anomaly, which is more likely to hit female savers, should be a priority for the government.”
