AE gender and age gap shrinking – TPR

The amount of young people and women saving into an auto-enrolment workplace pension scheme has increased, shrinking the gender and age gap, according to The Pensions Regulator’s (TPR) latest figures.

It found that the increase in participation from people aged 22 to 29 increased from 24 per cent in 2012, the year auto-enrolment was introduced, to 84 per cent in 2018, the largest increase of any sector.

In its annual Automatic enrolment commentary and analysis, TPR revealed that both male and female participation in the private sector increased to 85 per cent, whereas before 2012 there was a higher proportion of male employees in workplace schemes.

AJ Bell senior analyst, Tom Selby, said that the government was justified “to some extent” in congratulating the success of auto-enrolment, but that the policy is not a “silver bullet” to solve the UK’s retirement issues.

“The fact over 10 million people, many of whom are young and women, have been automatically enrolled into a pension since 2012 is to be celebrated, but average contributions remain painfully low,” he added.

“In 2018 the average contribution to a private sector defined contribution scheme stood at just 5 per cent, although this should increase following the rise in the auto-enrolment minimum contribution to 8 per cent of relevant earnings earlier this.

“However, even at this higher level most people will fall short of their retirement aspirations.”

TPR’s report also revealed that, between the introduction of auto-enrolment in 2012 and April 2018, the proportion of eligible staff saving into a workplace pensions increased from 55 per cent to 87 per cent.

Furthermore, the annual amount saved by members increased from £16.8bn to £90.4bn during the same period, while pension scheme participation increased by 12 per cent for small employers and 20 per cent for micro employers between 2017 and 2018.

Commenting on the report, Pensions Minister, Guy Opperman, said: “It’s great to see a whole new generation of workers in big and small businesses putting money away and planning for a more secure future. The progress we’ve made towards eliminating the gender gap in pension saving is hugely encouraging.

“Automatic enrolment has transformed pension saving and boosted the retirement prospects of millions of people, and we’ll make sure that even more can benefit from workplace pensions.”

However, Royal London director of policy, Steve Webb, warned that the statistics showed a “worrying decline” in the extent that employers are aware of their auto-enrolment duties.

The number of micro employers aware of all their duties fell from 88 per cent to 82 per cent in a year, while awareness amongst medium sized employers shrunk from 98 per cent to 94 per cent.

“Automatic enrolment has been a huge success story, but it is vital that the momentum is maintained. It is worrying that growing numbers of micro and medium sized firms are not fully aware of their duties under the law,” stated Webb.

“There is a risk that this will lead to workers missing out. The government must sustain publicity around automatic enrolment, especially targeted at employers, if the programme is to continue to be a success.”

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