Pension scheme membership at record high, but contributions fall
PENSION SCHEME membership levels have reached a record high, but falling average contributions into pots have prompted concerns savers are heading for a retirement shock.
Total membership of occupational pension schemes in the UK was an estimated 41.1 million in 2017, the highest level recorded by the Office for National Statistics (ONS) survey.
But looking at defined contribution (DC) pension schemes in the private sector, the average contribution rate being paid into savings pots by employees and their employers was 3.4 per cent in 2017, falling from 4.2 per cent in 2016.
The launch of automatic enrolment into workplace pensions, which started in 2012, has boosted the number of retirement savers.
Alistair McQueen, head of savings and retirement at Aviva, said private sector pension contributions had tumbled from a recent contribution high of 9.7 per cent of salary in 2012, with major implications for the more than nine million people who have been introduced to workplace pensions since automatic enrolment was introduced.
The figures showed that active membership of occupational pension schemes - made up of current employees paying in or having contributions made on their behalf - grew from 13.5m in 2016 to 15.1m in 2017.
Minimum contribution rates into workplace pensions are gradually being stepped up over time.
Nathan Long, senior analyst at Hargreaves Lansdown, said: “Attention should now shift to helping everyone gain the confidence to take control of their own retirement if they want to.
“The amount people are paying in needs to rise, but will automatically go up to eight per cent of earnings when rules change in April next year.” Clare Moffat, of Royal London, said: “The increase in the minimum contribution for auto-enrolment will help but as it currently stands these increases will still not be enough to deliver a decent retirement income.”