Auto-enrolment continues to prove successful as the number of employees enrolled in a workplace pension hit a record high.
Data from the Department for Work and Pensions (DWP) showed 19.2 million people were contributing to a workplace scheme in 2019, a 2.6% increase from 18.7m people in 2018.
Naturally, as the number enrolled increased, so did the amount of money saved. In 2018, £93.1bn was saved. This increased by 5.7% to £98.4bn in 2019, with the minimum contribution being 8% of earnings.
The Office for National Statistics (ONS) attributes much of the rise to the introduction of auto-enrolment in October 2012, which has brought more than 9.5 million people into pension schemes as well as staged roll-out to all employers completing in February 2018.
Aviva workplace savings manager, Laura Stewart-Smith, believes that whilst the increasing numbers showed a growing popularity in participation, it is important for providers and the government to continue encouraging people to save.
Ms Stewart-Smith added:
“Auto-enrolment has helped to create a savings culture but for many there is still a long way to go.
The UK’s economic outlook is challenging but it is important that people don’t lose sight of saving goals.
A workplace pension scheme can provide greater certainty as it ensures individuals are continuously investing in their future, with the added benefit of tax relief and an employer contribution.
Over time, this may build up a sizeable pension pot which could help support people in achieving the lifestyle they aspire to in retirement.”
Steve Webb, director of policy at Royal London, said:
“It’s great news that nearly 10 million extra workers are now saving in a pension because of automatic enrolment, but these figures show the champagne needs to be put on ice.
The hard work of automatic enrolment will be in supporting workers and firms to get these contributions up to more realistic levels.”
Could COVID-19 cause a decline in savings?
Since the coronavirus pandemic started in March 2020, 16% of workers have admitted that they are planning to reduce the amount they save into pensions due to the increased pressure for short term needs.
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