On the go: Since the introduction of auto-enrolment in 2012, the proportion of UK employees enrolled in a workplace pension has soared from 47 per cent to 76 per cent in 2018, according to research published today by the Office for National Statistics.
It found that 90 per cent of public sector and 72 per cent of private sector employees were participating in an occupational pension in 2018, with the gap between these sectors narrowing.
The most transformational aspect of the auto-enrolment regime is that people are now being funnelled into workplace pension saving at a far younger age.
Chris Connelly, propositions and solutions director at Equiniti, said: “Once again it was the youngest who saw the biggest rise in participation, with a six percentage point increase in scheme membership for 22-29 year olds – in total, 79 per cent now have a workplace pension.”
The ONS research also showed that defined contribution pension schemes are inching ever closer to overtaking defined benefit schemes.
In 2018, the proportion of employees with workplace pensions of this type (34 per cent) almost equalled that of DB (36 per cent).
The vast majority (85 per cent) of DB pension members received employer contributions equivalent to 12 per cent or more of their earnings in 2018, while just 8 per cent of DC members received employer contributions of this size, with many DC members likely to be on the breadline at retirement with such low contribution levels.
A little progress has been made, as David Gibb, chartered financial planner at Quilter, highlighted: “Employers are pushing the onus back onto the employee to contribute to their pension. A solid proportion of the population is taking this seriously and went above the minimum contributions last year with 38 per cent contributing between 2 per cent and 3 per cent, up dramatically from the just 6 per cent who contributed those levels in 2017.”
One surprising finding is that more women than men are now members of workplace pension schemes.
This is partly driven by the fact that pension membership rates are much higher in the public sector where women make up a larger proportion of the workforce, but as Steve Webb, director of policy at Royal London pointed out, “there remains a pension gulf between men and women” in terms of earnings and contribution levels.
