Auto-enrolment contribution levels have held up despite a global pandemic and a cost of living crisis, according to new figures from the Department for Work and Pensions.
In its Workplace Pension Participation and Savings Trends, published today (November 22), the government revealed that 88 per cent of eligible employees (20.4mn) were participating in a workplace pension in 2022.
Overall trends in participation have increased since 2012, driven by the private sector while public sector participation has remained high.
Steve Webb, partner at consultants LCP, said: “Amidst all of the economic doom and gloom, automatic enrolment is a standout success.
“It might have been expected that the disruption caused by a global pandemic would undermine pension saving rates, especially as this was followed by a cost of living crisis which affected millions of households.
“Yet official estimates suggest that very few people have responded by giving up on workplace pensions. This is a reminder of the power of inertia and also of the dangers of meddling with a system which is working remarkably well.”
The data revealed that workplace pension participation of UK employees increased between 2012 and 2021, up from 47 per cent to 79 per cent of UK employees.
Total annual workplace pension savings for eligible savers was £115.9bn in 2022.
While this represented an increase in savings in cash terms from 2021 (around £1.2bn), when adjusted to 2022 earnings levels, this represents a real terms fall (around £5.6bn).
Overall in 2022, contributions by employees accounted for 26 per cent of saving, with employer contributions accounting for 65 per cent, and income tax relief on the employee contribution the remaining 10 per cent.
Since 2012, many gaps in participation have narrowed – the largest increases have been seen in agriculture & fishing and distribution, hotels & restaurants industries and among small private employers (5 to 49 employees).
But most groups have seen trends in participation stabilise between 2018 and 2022.
There are some gaps that remain in 2022 and there is low participation for some groups - 59 per cent for employees of micro employers and below 75 per cent for Pakistani and Bangladeshi, and Indian employees.
sonia.rach@ft.com
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