Median annual earnings for individuals saving into a workplace pension have dropped from around £30,600 to £19,600 between 2011 and 2021, according to a report published by Nest Insight.

The report, which examines the experience of Nest members and is titled Retirement saving in the UK 2021, noted that the introduction of automatic enrolment had sought to target those with median annual earnings of around £19,800.

Nest Insight said opt-out rates had remained low in the 12 months ended 31 March 2021, coming in at 10.1 per cent, while cessation rates came in at 2.3 per cent.

The report noted that contribution rates were also increasing, with mean contribution amounts having climbed by 8 per cent for 2020/21 compared to 2019/20 and average pot sizes having risen from £447 to £1,815 over the same period.

However, 89 per cent of Nest members were found to contribute the minimum 5 per cent of qualifying earnings to their pot, while 85 per cent of employers contribute the minimum 3 per cent of qualifying earnings to their workers’ pots.

The report also examined savers’ expectations for retirement, noting that 44 per cent of Nest members aged 40 and older, and 55 per cent of members aged 60 and older, expected to delay retirement beyond state pension age.

Two-fifths (40 per cent) of Nest members aged 60 and older say the reason they would continue working in retirement was that they did not feel ready to stop working, while another 40 per cent said they would need to continue working in order to be able to afford essentials.

Nest Insight senior analyst, Richard Notley, commented: “Looking back over the past 10 years, it’s clear to see that auto-enrolment has made pension saving much more accessible and it’s now become the norm for many UK workers. This increased saving is vital to helping millions more people secure a better retirement.

“As we can see by looking at Nest’s membership, many of the workers that have been brought into pension saving through auto enrolment are younger and lower paid workers, precisely those who were deemed to be most in need of access.”

He noted that 28 per cent of Nest’s current membership was between 22 to 30 years old but estimated that “by 2050 the age distribution is predicted to be much flatter”, adding that this raised questions about how the scheme could adapt its service “to meet the evolving needs and priorities of their members”.

Notley said: “As the new generation of savers continue along their savings journey, it will be essential to understand and address the challenges they may face in achieving a financially secure retirement, and identify and test solutions that may help them get there – from approaches to increase pension engagement, to tools designed to improve their short-term financial resilience and help them arrive at retirement in an overall financially healthy position.”

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