New data has revealed that 2017 saw the total value of savings into workplace pensions grow by £4.3 billion during the year.
According to the Department for Work and Pensions, the total value hit £90.3 billion last year, with 84% of eligible employees taking part in the scheme. The rise in uptake – from 77% in 2016 – is largely due to the introduction of auto-enrolment by many employers.
Despite the rise in total savings, the data also shows that the same cannot be said when looking on an individual level. Per employee, the amount saved has been gradually dropping since 2012, with an increasing proportion of savers in the private sector having been enrolled on minimum contributions schemes automatically.
However, the Department for Work and Pensions does highlight the intended impact of the scheduled increases in minimum contributions for auto-enrolment. Rising from 2 to 5% earlier this year, the minimum is set to rise again in 2019, up to 8%.
Commenting on the figures was senior pension analyst at Hargreaves Lansdown, Nathan Long. He said: ‘The government’s auto-enrolment regime is responsible [for the current situation], as it throws first-time savers into a pension although it currently insists on only very low saving levels.
‘Young people are the biggest winners from the rules, as their money works harder for them from a much younger age. The first increase in the minimum saving levels happened in April and will rise again in April next year; by then the picture should be looking far rosier.’
