New Government data reveals total amount saved in workplace pensions increased £4.3 billion to £90.3 billion in 2017 (Source: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/712812/workplace-pension-participation-and-saving-trends-2007-2017.pdf)
Employers paid in £53.8 billion during the year, while employees contributed £27.5 billion
Small drop in persistency of saving and average savings levels a concern
Increases in auto-enrolment minimum contributions should boost retirement pots
Tom Selby, senior analyst at AJ Bell, comments: “Overall these figures show encouraging progress as automatic enrolment looks to turn the UK into a nation of savers.
“The number of people saving in a workplace pension continues to rise as the reforms are rolled out across the country, with matched employer contributions and tax relief increasing the value of member contributions more than three-fold. It is also extremely encouraging to see participation levels between men and women are now almost identical.
“However, now is not the time for complacency. The small dip in the persistency of saving – defined as eligible employees saving in a workplace pension in at least three of the last four years – is potentially worrying, while it is clear the amount people are on average contributing to their retirement pots will need to increase.
“When this happens will likely be determined by a combination of politics and the health of the economy, while the reaction of members to contribution increases this year and next year will also be monitored closely.”
Sector breakdown
“In addition, not all sectors save to the same extent. For example, while almost nine in 10 eligible employees working in professional occupations are saving for retirement with their employer’s scheme, this figure drops to just 77% for skilled tradesmen and women.
“Although it is likely this is primarily due to the wage differences of these professions, policymakers should investigate whether better targeted communication could improve retirement savings levels in different parts of the economy.
“What this data doesn’t cover are the millions of workers who are excluded from auto-enrolment at the moment. The self-employed, in particular, are growing in numbers – there were 4.8 million self-employed in the UK in 2017 compared to just 3.3 million in 2001 - as the so-called ‘gig economy’ shifts working patterns in the UK.
“Even in the absence of an employer contribution, the combination of tax relief, the power of tax-free compound growth and flexibility from age 55 make pensions an extremely attractive option for the self-employed.”