UK employee pension participation increases whilst self-employed decline
Eligible employees participating in a workplace pension in the UK increased to 87 per cent over 2018, a 3 per cent rise on the previous year, UK government stats have revealed.
The Department for Work and Pensions’ (DWP) latest workplace pension trends published today, 5 June, also found that £90.4bn was saved in 2018, an increase of £7bn on the total amount saved in 2017.
Since the introduction of auto-enrolment in 2012, employees saving in the private sector has more than doubled from 42 per cent to 85 per cent in 2018, of the 13.9 million eligible, while pubic sector has remained relatively stable, increasing from 88 per cent to 93 per cent over the same period.
The highest levels of participation continued to be in the largest employers, with 89 per cent of eligible employees participating in the 5000 plus employer band, compared to 90 per cent in 250 to 4,999 employer band.
However, following the introduction of auto-enrolment duties for the smallest employers in 2017, the largest uptick in participation was seen in the small (five to 49 employees) and micro (one to four) bands, with participation rates increasing from by 12 per cent and 20 per cent respectively.
Commenting, Aegon pensions director, Steve Cameron, said: “This year’s figures show positive trends particularly for small and micro employers, lower earners, those working part time and those in younger age bands. This shows that auto-enrolment is making a real difference for these employees all of whom have historically been at risk of not saving for retirement.”
The largest increases in participation was seen in the lowest age groups, driven by the private sector, which has seen a 60 per cent increase in participation rates since 2012.
“The rise in participation for younger age bands is particularly encouraging as it might be tempting for this group to prioritise other financial commitments over saving for retirement,” Cameron added.
“For young workers it’s the contributions at the start of their career which can make the biggest difference as they have the longest to benefit from investment growth.”
Despite this, the self-employed have continued to see a decline in its saving participation, decreasing from 27 per cent in 2008/09 to 15 per cent in 2017/18.
Overall in 2018, employee contributions accounted for 26 per cent of savings of the £90.4bn saved, compared to 64 per cent of employer contributions and 10 per cent in tax relief.
Pensions Management Institute vice president, Lesley Alexander, said: “The rise of the gig economy has seen a sharp increase in the number of people who are self-employed or who work part-time. We need to ensure that such individuals are brought into pension saving too.
“Moreover, while £90bn in overall saving is an impressive figure, if individuals are saving at the statutory minimum of 8 per cent of qualifying earnings, they will still not be saving enough each month to secure a comfortable retirement.”
Original article from: http://www.europeanpensions.net/ep/UKEmployee-pension-participation-increases-self-employed-decline-continues.php
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