Number of workplace pension savers remains stable during pandemic

The number of people saving into a workplace pension scheme has remained stable through the pandemic, new government figures have revealed.

A report published by the Department for Work & Pensions (DWP) showed that overall participation of eligible employees sat at 88% in 2020, equivalent to 19.4 million eligible employees, which is a level similar to 2019.

The data showed that since 2012 there has been a large increase of 8.7 million people to the 19.4 million eligible employees participating in a workplace pension, which the DWP suggested shows the “positive impact” of the workplace pension reforms to date.

The driver for the overall increase is the private sector, which is where the largest increases have been recorded. Since 2012, private sector participation has risen by 44 percentage points to 86% of private sector eligible employees participating in 2020, which stood at 14.3 million eligible employees.

Figures showed the participation rate of eligible employees in the public sector also increased by 1.6 percentage points between 2019 to 2020, a level consistent with the small year-on-year fluctuations recorded over the period since 2012.

Furthermore, the gap between public and private sector participation has now narrowed to 7.5% in 2020, which is the first year the rate has not increased since 2013.

AJ Bell head of retirement policy, Tom Selby, commented: “Despite the uncertainty facing millions of savers in 2020/21, the majority have stuck with their workplace pension, benefitting from both upfront tax relief and matched employer contributions in the process.

“Although overall many are still saving too little to enjoy a comfortable retirement, the fact automatic enrolment held firm during the most turbulent 12-month period in living memory is hugely encouraging.

“The challenge is not over, however. The UK economy has been held together by hundreds of billions of pounds of state support, primarily provided through the furlough scheme. As this support is withdrawn, policymakers will need to keep an eagle eye on both the unemployment rate and any knock-on impacts on retirement saving.”

Aegon head of pensions, Kate Smith, also warned that there are still “worrying gaps” around part-time employees and the self-employed, and suggested that improvements to auto-enrolment are needed.

“Female part-time participation rates continue to be higher than that of male part-timers, but overall women are saving much less is a pension than men,” Smith highlighted.

“The self-employed in particular risk being left behind in terms of pension savings with participation rates having declined from 21% to just 16% over the last 10 years. This is a really worrying trend as the self-employed were one of the hardest hit groups by the pandemic.

“Although the number of eligible employees joining their employer’s workplace pension is steadily increasing, there are still far too many un-pensioned employees who don’t meet the auto-enrolment criteria and therefore don’t automatically benefit from an employer pension contribution.”

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