United Kingdom

Three quarters of Brits are saving into workplace pension schemes thanks to auto enrolment

April 2018

Auto enrolment has led to nearly three-quarters of UK employees saving for retirement through workplace pension schemes with a significant increase in pension membership among younger workers, the latest figures from the Office of National Statistics (ONS) has revealed.

73 per cent of employees are now pension scheme members in comparison to 67 per cent who were automatically enrolled the year before. Pension provision for staff aged between 22 and 29 increased from 65 per cent in 2016 to 73 per cent in 2017 while 18.5 per cent of employees between 16 and 21 who were otherwise ineligible, still had access to a workplace pension scheme.

Meanwhile, over 20 per cent were enrolled in defined contribution (DC) schemes and 28 per cent were enrolled into defined benefit (DB) schemes. In addition, 20 per cent were enrolled in group personal and group stakeholder pension schemes.

Adam Burn, principal at Aon said the ONS figures indicated a ‘clear progression’ towards meeting the main aims of auto enrolment in terms of employers offering workplace pensions, increasing membership take-up of schemes and encouraging higher levels of contributions from younger workers.

“This is great to see, especially with take-up rates among younger workers as they are unlikely to receive state pension benefits until much later in life compared to previous generations,” he said.

However, the ONS statistics also highlighted an imbalance between private and public sector pension membership and certain professions. 89 per cent of public sector employees were saving into a workplace pension scheme in comparison to 67 per cent among private sector staff. In addition, there was a significantly lower rate of pension scheme membership among blue-collar workers (54 per cent) in comparison to those in professional occupations (86.3 per cent). Full-time staff were also more likely to have pension membership (81.7 per cent) than part-time staff (51.6 per cent).

Of particular concern was the ‘growing proportion’ of private sector workers making pension contributions of less than 2 per cent. 42 per cent contributed under 2 per cent in 2016 while 48 per cent contributed less than 2 per cent in 2017. Public sector employees however contributed more than 7 per cent, on average.

According to Burn, the difference in pension membership levels between sectors and certain professions could be a reflection on the understanding workers have about pensions and the information available to them, rather than a ‘definitive view’ as to the appropriateness of pensions overall.

“For example, it may be possible that public sector employers are investing more in resources in educating and information employees compared to their private sector counterparts.” He added: “Nevertheless, subsequent increases in contribution rates in addition to awareness-raising campaigns may help staff improve their retirement outcomes for the future.”


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