Commenting on the DWP’s Workplace Pension Participation and Savings Trends statistics published today by the DWP, Troy Clutterbuck, CEO, NOW: Pensions said: “Auto enrolment has re-energised pension saving in the UK. In 2012 just 55% of eligible employees were saving into a workplace pension, in 2018 this number had risen to 87% – a staggering turnaround.
“But, the spectre of adequacy continues to loom large with a growing gulf between the fortunes of public and private sector savers.
“With more savers paying minimum contributions, the average amount saved per employee in private sector schemes has declined sharply from over £6,000 in 2012 to just £3,616 per eligible employee in 2018.
“In public sector schemes, the picture is far more stable with public sector employees saving double of those in the private sector – £8,263.
“To prevent private sector savers being bitterly disappointed when they reach retirement, government need to act. A good starting point for this will be basing contributions on every pound of earnings – a change recommended in the 2017 auto enrolment review.
“Longer term, contributions need to rise beyond 8%. But, a question needs to be asked about who bears this increased burden. In the UK, employers bear just 37.5% of the contribution burden which is out of step with many other countries that have nationwide automatic enrolment schemes or nationwide DC schemes. A more equitable split needs to be given serious consideration.”