Forcing people to save may sound controversial but new figures marking the seventh year of auto enrolment suggest it may actually be working.
Data from the Pensions Regulator shows between the introduction of the reforms – mandating employers to register staff in pension schemes – in 2012 and April 2018, the overall proportion of eligible employees saving into a workplace pension increased from 55% to 87%.
Not only are more people saving into a pension, the amount being put away is also increasing.
The annual amount saved by eligible savers was £90.4 billion in 2018 – an increase of £16.8 billion on the total amount saved in 2012, and an increase of £7 billion over 2017.
The largest increases in participation have been seen amongst eligible employees in the youngest age groups. In the private sector, the largest increase was seen in 22 to 29 year olds – increasing from 24% in 2012 to 84% in 2018, according to the Pensions Regulator.
Female workers are also catching up with their male counterparts.
In 2018 participation levels increased to 85% for both male and female eligible employees in the private sector. Before 2012 there was a higher proportion of male employees participating in workplace pensions.
There was however one worrying stat suggesting awareness of automatic enrolment responsibilities is falling.
The report shows only 82% of ‘micro’ employers are aware of all five duties, compared with 88% a year earlier. Awareness among medium sized employers was also down, from 98% to 94%.
Responsibilities include keeping records of all auto enrolment activities, monitoring the ages and earnings of new and existing staff every time they are paid to check whether they are eligible to join the pension scheme, managing requests to join or leave the pension scheme and paying contributions.
- Speak to your financial adviser if you need any help keeping on top of your pension responsibilities.
- HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen
- The value of an investment and any income from it can fall as well as rise and you may not get back the original amount invested
Past performance is not a reliable indicator of future performance and should not be relied upon