Growth in workplace pension participation has levelled off - ONS

The proportion of UK employees that have a workplace pension rose by just 0.1 percentage point in 2019/20 to 77.6 per cent, as participation increases "levelled off", according to figures from the Office for National Statistics (ONS).

The statistics, which were compiled from the Annual Survey of Hours and Earnings, showed the proportion of employees enrolled in workplace schemes had increased from less than half (46.5 per cent) of all employees when automatic enrolment was introduced in 2012.

Pension participation grew by 3.3 percentage points in 2017/8 and 1.3 percentage points in 2018/19.

As of April 2020, the group least likely to have a workplace pension were those aged 16 to 21, with just a fifth (20 per cent) of these having workplace schemes, with this proportion shooting up to 80 per cent in the next age group.

ONS attributed the sizeable gap between the two groups to younger savers falling outside the boundaries of auto-enrolment eligibility.

The statistics also showed that the gender gap in workplace pension participation was "negligible" in 2020, although full-time employees were found to be 1.5 times more likely to have a pension than part-time employees.

Nine out of 10 (90 per cent) public sector employees were shown to have a workplace pension, compared to less than three-quarters (73 per cent) of those in the private sector.

The least likely group to be saving into a workplace pension were full-time private sector employees earning between £100 and £199 weekly, with just 41 per cent of this group engaged in workplace schemes.

ONS stated that this was likely to be caused by automatic enrolment minimum earnings thresholds, noting that participation increased steeply to almost two-thirds (65 per cent) in the next earnings band.

In contrast to the private sector, 93 per cent of full-time public sector workers earning £100 to £199 each week had a workplace pension.

Quilter pensions expert, Ian Browne, said the new statistics “shine a light on how transformational automatic enrolment has been in getting people to save for later life” but also illustrated “a persistent gap in workplace pension participation between the public and private sectors”.

He added: “This year marks the first time since the introduction of automatic enrolment that overall participation has not improved. This may be due to more people feeling like that they need more money in their pocket today or it could simply be that participation has hit a ceiling and unless other policy levers are pulled this figure is unlikely to budge.

“As the economic realities of the pandemic become clearer it will be interesting to see whether this figure remains flat or even drops if people’s finances are put under more strain.”

As such, Browne stated that it was time to consider how the results of auto-enrolment could be “replicated or tweaked to suit other types of workers such the self-employed”, noting that this group had “suffered a significant financial shock” due to the pandemic.

He concluded: “A solution to help prompt this group of workers to save for retirement needs to be looked at urgently as their financial needs differ to much of the rest of the working population.”

    Share Story:

Recent Stories

Are current roads into retirement delivering member value?
Laura Blows explores HSBC Master Trust’s recent report, Converting pension pots into incomes, with HSBC Retirement Services CEO, Alison Hatcher.

Savings and finance at retirement
Laura Blows is joined by Claire Felgate, Head of Global Consultant Relations, UK, at BlackRock, to discuss savings and finance at retirement. Please click here for an edited write-up of the video

Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth. Please click here for an edited write-up of the video

Pension portfolios – the role of asset-backed securities
Laura Blows is joined by Royal London Asset Management (RLAM) head of sterling credit research, Martin Foden, and its Senior Fund Manager, Shalin Shah to discuss the role of asset-backed securities (ABS) within pension fund portfolios
Incorporating ESG into fixed income
Laura Blows is joined by TCW head of fixed income ESG, Jamie Franco, to discuss incorporating environmental, social and governance (ESG) strategies into fixed income portfolios