Average contributions into private sector DC pension schemes during 2017 fell to 3.4 per cent, Office for National Statistics results have revealed.
The recently released study from the ONS has found that contributions into private sector DC schemes fell from 4.2 per cent in 2016 and have decreased significantly from 2012’s level of 9.7 per cent.
On average, members contributed 1.2 per cent and employers 2.1 per cent.
Barnett Waddingham senior consultant Malcolm McLean commented: “The question of inadequate savings levels and the frustrations these will eventually cause for the present generation of savers will have to be addressed sooner rather than later.”
Contribution levels will improve in April, when legislation comes into force that will require minimum contributions of 8 per cent of earnings. However, some in the industry believe this will be insufficient.
McLean continued: “The government should contemplate and announce further rises up to a more appropriate level (say a maximum of 12 per cent) as soon as possible thereafter."
Hymans Robertson head of guided outcomes, Paul Waters, agreed: “These moves alone will not achieve enough and other measures, such as pushing out the target retirement date to coincide with their state pension age and further increasing contributions to a total of 12 per cent, will be needed to achieve an adequate income in retirement.”
However, it is not all doom and gloom. Membership of active occupational pension schemes has hit record figures, with 15.1 million saving for retirement in 2017.
ONS found that membership to these schemes has increased by 1.6 million from 13.5 million in 2016 as the implementation of auto-enrolment takes effect.
Active membership of private sector DC pension schemes also increased, up from 6.4 million in 2016 to 7.7 million in 2017.
The number of occupational pension scheme members overall rose to a record 41.1 million, while total membership of public sector pension schemes rose to 15.5 million, an increase of 700,000 from 14.8 million in 2016.
Hargreaves Lansdown senior analyst, Nathan Long, commented: “The growth in pension savers shows auto-enrolment has been spectacular at changing the financial future of the nation.”
However, there are concerns surrounding the number of preserved pension pots, which has increased to 15.8 million from 15.4 million in 2016. The figure was only 6.7 million in 2000.