The workplace pension participation rate of eligible employees in Great Britain remained at 88 per cent in 2023, although the total number saving into a pension rose by 400,000 to around 20.8 million, data from the Department for Work and Pensions (DWP) has revealed.

The DWP's latest update on workplace pension participation and savings trends showed that most groups have seen trends in participation stabilise in recent years, with participation differences across the population having narrowed since the introduction of auto-enrolment in 2012.

According to the update, the overall participation rate of all employees in Great Britain into a workplace pension was 80 per cent in 2023, equal to 22.3 million savers, a small rise on the 79 per cent (22.1 million) participating in the previous year.

Commenting on the figures, a DWP spokesperson said: “Today’s figures show the success of automatic enrolment and its positive impact in transforming the pensions landscape, enabling 22 million workers to save into a workplace pension.

"We will continue to ensure people have the dignity and financial security in retirement.”

The update also revealed that total annual workplace pension savings for eligible savers was £131.8bn in 2023, marking a £43.2bn real terms increase compared to 2012.

Overall in 2023, contributions by employees accounted for 26 per cent of saving, with employer contributions accounting for 64 per cent, and income tax relief on the employee contribution the remaining 11 per cent.

However, the average annual amount saved per eligible employee (£3,210) in 2023 remained below that of 2021, at £3,210 in 2023 compared to £3,950 in 2021, suggesting that the increased total workplace pension savings are being driven by increasing numbers of savers rather than increasing savings.

In addition to this, the DWP acknowledged that a number of pension savings gaps have continued and some eligible groups having relatively low pension participation levels, with a 57 per cent participation rate for employees of micro employers in the private sector and 73 per cent for Pakistani and Bangladeshi employees.

Furthermore, whilst the amount saved per male and female eligible savers in public and private sector have followed similar trends to overall sectoral amount saved trends, the DWP found that there are "persistent gaps" in average amount saved for male and female eligible savers in both sectors.

The DWP also found that whilst the number of active savers who stop saving each quarter as a proportion of total active savers has been stable over multiple years at under 1 per cent, this has been more volatile recently, perhaps due to Covid-19 and the rising cost of living, sitting at around 8 to 10 per cent in 2023/24.

This is not the only shift in trends being seen, as the DWP's update also included information on the number and types of pensions being accessed for the first time.

This showed that the vast majority, 95 per cent, of the 12.7 million individuals in receipt of a private pension payment in 2023 to 2024 are in receipt of a defined benefit or an annuity.

However, this is slowly changing, as the DWP found that, when assessing private pensions accessed for the first time, the proportion receiving a lump sum or other defined contribution product has risen from 37 per cent in 2016/17 to 49 per cent in 2023/24.

Industry experts have highlighted the figures as demonstration of the need to do more to increase the amount savers are putting into their pension, with growing calls for the new government to introduce further reforms to auto-enrolment.

Standard Life managing director, Gail Izat, warned that "we still have an under-saving issue in the UK and more needs to be done to help people secure a decent standard of living in retirement".

"Parliament passed an act aimed at lowering the age of eligibility for auto-enrolment to 18 and removing the lower earnings limit last September and, when implemented, this should boost pension participation further," Izat continued.

"We hope the new government will move quickly to progress this legislation. Longer-term, the single biggest lever we can pull to improve retirement outcomes is to raise minimum contributions and we hope action on this will come out of the Pensions Review recently announced by the chancellor – part of which rightly focuses on saving adequacy."

This was echoed by Broadstone senior consultant, Richard Sweetman, who said: “We know that more needs to be done in terms of increasing pension contributions so that the workers of today can achieve a decent standard of living in retirement.

"It is promising that the second stage of the recently announced Pensions Review will focus on adequacy, and we hope to see concrete steps and timeline for rapidly building employees’ contributions.

“There is never a good time for workers to see their monthly take-home pay shrink, but every year that goes by without mandating higher contributions will have an outsized impact on their total pension pot."

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