Recently published figures by the Office for National Statistics (ONS) have led to concerns about how financially prepared many people are for retirement, despite a rise in the number of people contributing to a pension following the introduction of automatic enrolment.
Automatic enrolment is a Government initiative to help more people save for later life through a pension scheme at work. It was introduced in October 2012 and makes it compulsory for employers to automatically enrol their eligible workers into a pension scheme. The employer must also pay money into the scheme.
ONS figures show that the introduction of automatic enrolment led to a welcome rise in pension scheme membership, with the proportion of employees contributing to a workplace pension increasing from 47% in 2012 to around 73% in 2017.
In particular, automatic enrolment led to increased participation in workplace defined contribution pensions. Around 43% of all UK employees paid into a defined contribution pension in 2017, compared with 17% in 2012.
However, while there has been a sizeable increase in the number of people participating in workplace pensions, many in the private sector with defined contribution pension schemes have been contributing at relatively low levels.
Around 45% of private sector employees with defined contribution pension schemes were contributing less than 1% of pensionable earnings in 2017, and only around one in three employees were contributing 3% or more.
Experts have warned that this level of saving isn’t enough to provide the type of retirement many would like to enjoy.
If you need advice or assistance concerning pension auto-enrolment or for anything else regarding pensions or other Financial matters, contact our expert team today.
Contains public sector information licensed under the Open Government Licence v3.0.