Workplace pension participation and contribution rates have ‘stabilised’

Workplace pension participation rates and contribution levels in the UK have stabilised in recent years, despite previous fears that the Covid-19 pandemic would negatively impact saving and participation levels, figures from the Department for Work and Pensions (DWP) have shown.

Following years of growth in participation since the introduction of auto-enrolment in 2012, overall participation of eligible employees has stabilised at around 88 per cent (20 million people).

Since 2012, private sector participation of eligible workers has increased by 44 percentage points to 86 per cent in 2021, while eligible public sector worker participation has risen by 5 percentage points to 93 per cent.

However, some gaps still remain and there was relatively low participation of below 65 per cent for some eligible groups, including micro employers, and around 66 per cent for Pakistani and Bangladeshi employees.

The total amount saved for eligible workers across both public and private sectors was £114.6bn in 2021, a £2.9bn increase from 2020.

Amounts saved increased by £0.2bn in the private sector and by £2.7bn in the public sector.

The DWP found that trends in stopping saving and contributions had remained “relatively stable” during and after the Covid-19 period.

In 2021/22, the overall stopping saving level increased, although this was mainly driven by a fall in those stopping saving due to ending their employment, which rose from 1.6 per cent to 1.8 per cent.

The proportion of workplace pension savers who made an active decision to stop saving remained at 0.6 per cent in 2021/22.

Employee pension contribution rates remained stable throughout 2021/22, the DWP noted.

However, between 2019/20 and 2021/22, the proportion of employees contributing at least 6.5 per cent of their earnings decreased from 46.7 per cent to 45.4 per cent.

Overall, employee contributions accounted for 26 per cent of pension saving in 2021, with employer contributions accounting for 65 per cent and income tax relief on employee contributions making up the remaining 9 per cent.

Male and female participation rates in the private sector have equalised for full-time employees, but gaps remain between full-time and part-time employees, and male and female part-time employees.

Since 2012/13, non-eligible employee participation has increased to 38 per cent, although there has not been a change in self-employed levels, which have remained at 18 per cent.

Commenting on the figures, Pensions Minister, Guy Opperman, said: “It’s encouraging to see that, despite the considerable challenges of the last few years, overall participation in workplace pensions among eligible employees has remained stable and total contributions have increased in real terms.

“Thanks to the success of automatic enrolment, a record number of Brits are now saving for retirement and our ambition for the future of AE will enable even more people to save more and to start saving earlier.”

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