Workplace pension participation up by a third since AE introduction

Participation in workplace pension schemes has increased from 55 per cent to 88 per cent of eligible workers since auto-enrolment began in 2012, according to figures from the Department for Work and Pensions.

A report from the government department showed that 19.2 million people, or 88 per cent of eligible employees, were participating in a workplace pension in 2019, up from 87 per cent in 2018.

This increase has been largely driven by private sector employees, as private sector participation rose by 44 percentage points to 86 per cent between 2012 and 2019, with 14.4 million eligible employees now using workplace pensions to save for retirement.

Public sector pension participation stood at 92 per cent in 2019 (4.8 million eligible public sector workers), roughly the same as in 2018 and an increase of 4 percentage points over 2012.

The annual total amount saved in 2019 by eligible savers was £98.4bn, an increase of £5.3bn on the total amount saved in 2018 in 2019 earnings' terms.

The highest participation levels were seen among those earning between £50,000 and £60,000 per year, with 93 per cent of eligible workers in this bracket participating in 2019, while the lowest were from those earning between £10,000 and £20,000, 79 per cent of whom were participating.

However, there is increased participation among lower earners, with the difference in participation rates between the highest and lowest earning groups of private sector workers having dropped from 58 percentage points in 2012 to 13 percentage points in 2019.

The self-employed were one of the few groups whose participation levels were decreasing, with the proportion participating having declined from 21 per cent in 2009/10 to 14 per cent in 2018/19.

Hargreaves Lansdown interim head of policy, Nathan Long, commented: “This latest data makes the pension story look really rosy, with participation and savings levels nudging to ever higher levels thanks to automatic enrolment into workplace pensions.

“The fact a third of people who are not eligible to be auto-joined are still saving shows that pensions are becoming a social norm within society. Age now plays almost no part in your likelihood to be putting money aside for your future, which is a huge leap forward.

“However, everyone is pausing for breath and awaiting the position after the Covid-19 shakedown. Quite how many of us will stick with our pension savings if friends and colleagues are losing their jobs is uncertain. The self-employed continue to be precariously placed with just a handful choosing to save into a pension, showing the existing incentives just don’t resonate.”

Women were more likely to save than men, with 89 per cent of full time eligible female staff participating in workplace schemes compared to 88 per cent of males, while 85 per cent of part-time female staff were saving, overshadowing the 74 per cent of their male contemporaries who were doing the same.

Now Pensions director of policy, Adrian Boulding, said: “However, this is not a true reflection of pension savings as women are far more likely to be locked out of a workplace pension in the first place due to eligibility rules.

“The £10,000 trigger threshold means that many people working in part-time jobs are not enrolled, which disproportionately impacts women. This is because 75 per cent of part-time workers are women, often because they have to juggle work with caring commitments for both children and elderly relatives.

“The current pandemic has only increased the number of women who have already had to reduce hours to balance looking after children and home schooling with work.”

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