• Official data published today reveals total UK pension wealth almost doubled from £3.6 trillion between 2006-08, to £6.1 trillion between 2016-18 (https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/pensionwealthingreatbritain/april2016tomarch2018#preserved-pension-wealth)
• Average pension wealth per occupational defined contribution saver dipped from £11,600 at the start of the decade to £3,300 between 2016-2018 as auto-enrolment brought in new savers
• Median pension wealth for active members lower for women (£20,000) than men (£25,300)
• Gender gap in retirement more significant, with men enjoying pensions in payment worth double those of women
• Surge in wealth held in ‘preserved pensions’ demonstrates why Government is pursuing pensions dashboards reform
Tom Selby, senior analyst at AJ Bell, comments: “The surge in private pension saving in the UK since the turn of the decade is something to be celebrated, but those thinking automatic enrolment will fix the UK’s pension crisis on its own are kidding themselves.
“While participation in pension saving has risen to record levels, average contributions remain low and for most people this will mean they fall below what they need to enjoy a comfortable retirement.
“The choices are relatively simple: save more today, retire later or retire on less money. For those who are able, part-time work in retirement will also be an option, although for many – particularly people with physically demanding jobs – this simply won’t be an option.”
Gender divide and dashboards
“There remains a significant gender divide in pensions, both as retirement pots are built up and when these pots are turned into an income.
“The root causes of this divide are in the workplace, with women on average earning less and being more likely to take career breaks to care for children or elderly relatives. This combination of factors means, on average, women save less during their careers and get less out when they stop working.
“The solutions to this problem are also most likely to be found in the workplace, with things like better childcare support and a greater focus on ensuring women enjoy the same pay and benefits as their male counterparts.
“One knock-on effect of auto-enrolment has been a sharp rise in the number of ‘preserved pensions’ – retirement pots left behind when people move jobs. It is for precisely this reason the Government is pursuing pensions dashboards reforms, allowing people to locate and view their pensions online.
“Over time this project could drive genuine improvements in engagement and savings levels in the UK.”
