Millions STILL facing poverty in their old age

As record numbers save for retirement

MILLIONS of workers are sleepwalking towards poverty in retirement despite record numbers paying into a pension, experts warn.

The Office for National Statistics said there were 41.1m occupational pension scheme members in 2017, compared to 39.2m in 2016.

The number of active members – those who are still making a contribution – rose from 13.5m to 15.1m as more and more join pension schemes through auto-enrolment.

Auto-enrolment was introduced in 2012. It makes it compulsory for employers to place all eligible workers on a pension scheme, to ensure retirees had enough money to support them in old age.

But Alistair McQueen, head of savings and retirement at Aviva, warned that many still face a postwork income lower than the minimum wage, which is currently £7.83 an hour for those over 25.

He said: ‘Millions of employees have embraced auto- enrolment since 2012 in the belief that it will deliver them a comfortable retirement. But based on the current system and the ONS data, they’re in for a shock.

‘Many are currently on the road to living on less than the minimum wage in retirement.’

The report showed that the vast majority of public sector workers have an occupational pension, with 6.3m active members of public sector workplace pension schemes compared to 8.8m private ones.

This is despite there being five times more people working in the private sector – suggesting that only a minority in the private sector are actively saving for a pension.

ONS data has previously revealed that public sector workers typically have a pension pot of £80,600, compared to £15,300 kept by private sector employees.

While more private sector workers are saving, contribution rates are falling to minimum auto-enrolment levels. From a high of 9.7pc of salary in 2012, the average fell by more than half to just 3.4pc in 2017 – with 1.2pc from the employee and 2.1pc from the employer.

This drop can be attributed to the low minimum of autoenrolment contributions dragging down the average.

Since the introduction of autoenrolment in 2012, up to April this year, the minimum contribution was 2pc – or 1pc each from the employee and employer. It has now risen to a total contribution of 5pc.