Helen Morrissey, pension specialist at Royal London, said: “These figures show that Britain is getting back into the pension savings habit with over £90bn saved by eligible employees. Auto-enrolment has played a particular part in this with pension participation in the private sector increasing massively since 2012. However, we need to build on this success to ensure groups such as part time workers and the self-employed are also participating as much as possible.”
Steven Cameron, Pensions Director at Aegon, comments: “The introduction of automatic enrolment in 2012 is credited for the sharp rise in the number of employees participating in to a workplace pension. The latest data shows this continues to increase as 2018 saw 87% of eligible employees participating into a workplace pension, an increase of 3 percentage points from 2017.
“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 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. 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.
“Whilst this is positive news there is still a significant proportion of the labour force which are being left behind. The self-employed workforce, unlike employees, have seen a continuous decline in participation rates and participation has fallen from 27% in 2008/09 to 15% in 2017/18. The government needs to focus their attention on this large proportion of the workforce to make pension saving more attractive or many will risk being left behind and run out of funds in retirement.
“There has also only been a very small increase in the average contribution for private sector employees. Despite the rise to the minimum contribution levels for auto-enrolment in April 2018, the shortfall compared to the public sector has risen. It may be that the effect of this will only become apparent in next year's figures.”
Stephen Lowe, group communications director at retirement specialist Just Group, said: “Today’s figures show 87 per cent of eligible employees are saving for retirement in a workplace pension in 2018. In the private sector, participation among employees has doubled in just six years.
“However, we shouldn’t forget that pensions are a two-stage process and encouraging more saving while working needs to be combined with intelligent decisions at retirement. FCA figures show that in 2017-18 more than half (53%) of the 590,000 pensions accessed for the first time were fully withdrawn. Many will have been by people years away from stopping working and with little thought for the tax consequences.
“There remains a worrying lack of policy coherence between auto-enrolment and pension freedom rules. A good start would be to auto-enrol people into the free guidance on offer unless they formally choose to opt out so that they receive impartial and independent guidance and help before they make choices they may later regret."
Pensions Management Institute, Vice President, Lesley Alexander said:“Automatic Enrolment has proved to be a real game changer in reversing the long-term decline in pension saving. The increase in participating employees – from just 55% in 2012 to 87% last year – shows that auto enrolment has been one of the great success stories of our time and provides a positive message about the long-term financial health of the nation. Employees saved over £90 billion into pension schemes last year – an increase of £7 billion over 2017 – showing that the public recognises the importance of long-term saving.
“However, as encouraging as this news is, there is still much to be done if the public is to enjoy a secure retirement. 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 £90 billion in overall saving is an impressive figure, if individuals are saving at the statutory minimum of 8% of Qualifying Earnings, they will still not be saving enough each month to secure a comfortable retirement. We still need to encourage the public to save more. Whilst we can be reassured by what has been achieved so far, there is still much that remains to be done.”
Workplace Pension Participation and Saving Trends 2008/18
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