Workplace pension participation has rocketed to its highest level in a decade with young people and those in lower paid jobs among the biggest winners.
New figures have revealed that overall, 70% of eligible employees –13.9 million people – paid into a workplace pension in 2014, a 15 percentage point increase in just 2 years.
Young people in the private sector in particular have enjoyed a remarkable boost to their future retirement prospects, with more than half now saving. The 54% of 22 to 29-year-olds who made regular contributions in 2014 is more than double the 2012 figure of 24%.
Bar staff, sales staff and workers in lower paid jobs are all benefiting too, with ever increasing numbers paying in. It is a further sign that the automatic enrolment pension reform is turning around the long-term decline in people who are saving for the future.
Minister for Pensions, Baroness Ros Altmann said:
There has been a dramatic increase in pension saving across the board, which is great news.
Automatic enrolment is key to a pensions revolution which is breathing new life into workplace pension saving, to help give people the security and independence to start planning for their future.
The numbers of people participating are set to continue rising as automatic enrolment extends its reach to small and micro firms between now and 2018, by which time about 9 million workers will have been enrolled.
We are working hard to try to help more employers set up and contribute to pensions for their employees.
The government will be increasing the minimum contributions that must be paid in to automatic enrolment to 8% in 2018, to help people further accumulate a bigger retirement pot.
Automatic enrolment has completely changed the face of pension saving. Instead of individuals having to fill out forms to join a pension scheme, they are now enrolled automatically by their employer provided they are at least 22 years old and under state pension age, and earn more than £10,000 a year. If they don’t want to belong they now have to actively opt out.
The workplace pension participation rates from the Office for National Statistics (ONS) also showed that:
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those earning between £10,000 and £20,000 saw the largest increase between 2012 and 2014, more than doubling from 21% to 50%
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the participation rate for staff in hotels, restaurants and bars is now running at 59% – up 31 percentage points in just 2 years
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the energy and water industry has the highest participation rate, with 83% of workers now paying into a workplace pension, an increase of 18 percentage points since 2012
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73% of women and 68% of men are now paying into a workplace pension, up by 15 and 16 percentage points respectively since 2012
The automatic enrolment process has been completed by large and medium-sized employers, and is now rolling out to small and micro firms the length and breadth of the UK. All employers have to offer their eligible staff access to a pension scheme, regardless of how many people they employ. So far nearly 5.3 million people have been enrolled by more than 50,000 employers.
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