Auto-enrolment progress has remained stable despite a turbulent year for both the labour market and households due to the impact of the Covid-19 pandemic, according to research from Nest Insight.

The Retirement saving in the UK 2022 report, which is based on the saving behaviours of over 11 million Nest members between April 2021 and March 2022, revealed that around 1 million businesses are now registered with the scheme, representing a 10 per cent year-on-year increase.

The number of members who made additional contributions to their retirement pots also rose by 36 per cent in 2021/22, with the total level of additional member contributions made to the scheme up just over 50 per cent compared to the previous year.

In addition to this, the report revealed a steady increase in pension pot balances, with the median value of pot contributions for a saver who contributed continuously in 2021/22 standing at £1,390, an 11 per cent year-on-year increase, while the median contribution for members on a part-year basis increased by 10 per cent to £350.

The number of enrolments has also increased by 17 per cent compared with 2020/21, while opt-out levels remained low at 8.3 per cent, although this was slightly higher for men at 8.7 per cent, compared to 7.9 per cent for women.

Affordability was a key issue for those not contributing, however, as 53 per cent of workers aged 30 and younger, who gave a reason for opting out, said they did so for affordability reasons.

Nest also confirmed that the impact of the cost-of-living crisis is not reflected in the data to March 2022, acknowledging that this will be a further challenge facing members in the future.

In light of this, the report included some insight into how members felt about the rising cost of living in March 2022, revealing that 25 per cent of members viewed their financial situation as very or fairly uncomfortable.

In addition to this, around 16 per cent of members felt that covering the general cost of living was a stretch financially, with Nest warning that a significantly higher proportion of its membership could find it difficult to cope with day-to-day living expenditure by the end of the year.

Indeed, over a third (37 per cent) of members said it would be a stretch to pay money into a savings product, while 48 per cent would struggle to make additional contributions into their Nest pension pot.

Commenting on the findings, Nest Insight director of analysis, Matthew Blakstad, stated: “Despite the turbulence during the year ending March 2022, the pensions auto enrolment system, as seen through the lens of Nest’s administrative data, has remained stable.

“The great majority of Nest members have continued to follow the default settings that they’ve been enrolled into and, as a result, overall levels of retirement savings have continued to rise throughout these challenging times – supporting the objective of the UK’s workplace pension reforms, helping millions more people secure a better retirement.

“Of course, we know that the rising cost of living is a further challenge now facing all pension savers. Nest Insight will continue to report on this emerging issue in future research, and in further editions of ‘Retirement saving in the UK’.

“Nest Insight is also currently doing in-depth research into the interactions between auto enrolment pension saving and other financial behaviours. This work is helping us understand how best to support pension savers with their overall financial health.”

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