New data from the Office for National Statistics (ONS) shows that around eight in 10 eligible employees had a workplace pension in April last year despite the tough economy.
The ONS said the workplace pension participation rate in the UK was 79% in April 2021, up slightly from 78% in 2020. In 2012 - the year automatic enrolment into workplace pensions started - participation levels were at less than half (47%). It said the growth was partly explained by increased public sector employment driven by the response to the coronavirus pandemic.
Since the rollout of automatic enrolment in October 2012, the difference in workplace pension participation between the public and private sectors has narrowed considerably.
The report said this was mainly driven by increased participation in the private sector.
The earnings "trigger" for automatic enrolment eligibility is £10,000.
Commenting on the new data, Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “Auto-enrolment has been a triumph, with pension participation in the private sector once languishing at a mere 32% now surging to 75%. However, there is still much more to be done as there are still too many people missing out on a workplace pension.
“Looking closely at the data we see that while eight out of 10 eligible employees now have a workplace pension, this falls to just two in ten among those who are currently too young to be auto-enrolled -the under 22s.
“Similarly, those who fall beneath the earnings trigger of £10,000 are also much less likely to have a workplace pension and so miss out on valuable contributions to their retirement.”
Helen continued: “The UK Government pledged in its 2017 Auto-enrolment Review that it would look to widen out auto-enrolment by lowering the minimum age to 18 and allowing people to contribute from the first pound of their earnings.
“It is clear these actions would considerably boost participation among these underserved groups and give them the opportunity to save more for longer and build a more resilient retirement as a result. Anyone who feels they can’t afford it is able to opt-out, but the data overwhelmingly shows that the vast majority of people remain in their pension once they’ve been enrolled.”
The UK Government has so far not given a timeline for these potential changes.
The review initially gave a mid-2020s timeframe but when pressed on the issue recently the pension minister would only say the reforms would be brought about “in the fullness of time”.
Helen warned: “These are important next steps in the evolution of auto-enrolment, and they must not be kicked into the long grass.”
To keep up to date with the latest pensions news, join our Money Saving Scotland Facebook group here, follow Record Money on Twitter here, or subscribe to our twice weekly newsletter here.
