Over half of us now have workplace pensions
Almost six in 10 workers are now saving for their retirement with occupational pensions according to the latest data from ONS. The figure hit 59% in 2014, up from 50% in 2013.
The increase is thought to be thanks to auto-enrolment, which is gradually seeing more employees being signed up to work-based pensions automatically. Should they not wish to pay into the scheme – which also enjoys employer contributions and government tax relief – they have to opt out.
Perhaps unsurprisingly, the biggest increase was among younger savers who might not have previously prioritised pension saving.
However while it is encouraging to see more people saving into pensions, contribution rates remain low. A third of workers are paying less than 2% of their earnings into their pension while 43% of employers are contributing less than 4%.
Commenting on the figures, Nathan Long, head of corporate pension research at Hargreaves Lansdown, said: "Membership levels are up and particularly among those aged 22-29. This is great news, but attention must turn to the painfully low contribution levels being paid.
“Auto-enrolment prescribes a minimum 8% by 2018, but contributions need to rise for savers to achieve a comfortable retirement."
Long also said that younger savers would need to be encouraged to remain in schemes once contribution rates rise in 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," he added.