26th February 2015
The UK now has the highest level of pension saving since records began in 1997 with scheme membership rising across all age groups, according to new data from the Office for National Statistics.
The figures highlight the drive of automatic enrolment – where workers are automatically put into a pension scheme – in rebuilding Britain’s saving culture.
According to the Department for Work and Pensions (DWP), to date, the scheme has seen more than five million workers brought into a pension plan, saving more or saving for the first time.
Its annual survey of Hours and Earnings statistics, which reflect the picture in 2014, show:
Minister for Pensions, Steve Webb, described the rise in the proportion of people saving for retirement over the past three years as “stunning.”
He said: “Pension saving is now at its highest level since records began. This is due in no small part to the success of automatic enrolment, which is changing the culture of pension saving in Britain. Millions more people are now saving into a workplace pension, allowing them to build a decent nest egg to enjoy in their retirement, on top of a reinvigorated new State Pension.”
Nathan Long, head of corporate pension research at Hargreaves Lansdown believes the rise in membership levels is great news but he added that attention must turn to the painfully low contribution levels being paid.
He said: “Auto-enrolment prescribes a minimum 8% by 2018, but contributions need to rise for savers to achieve a comfortable retirement. Before we can educate employees about the need to save more, we must first encourage young people newly enrolled into workplace pensions to remain savers when contribution rates rise in both 2017 and 2018.
“The pay of young people is like a balloon. There is only so far it can be squeezed before catastrophe. In the case of increased contributions, catastrophe will be the loss of blossoming savings habits in the young unless they are educated to understand the importance of saving.”