Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Number of people saving in workplace pensions rises slightly

pensions

Overall, 79% of eligible employees, or 22.6 million, were participating in a workplace pension in April 2021, up slightly from 78% in 2020, according to the Office for National Statistics

The number of people saving in workplace pensions has risen slightly, with the average pension value standing at £65,400 in the public sector compared to just £10,300 in the private sector.

Overall, 79% of eligible employees, or 22.6 million, were participating in a workplace pension in April 2021, up slightly from 78% in 2020, according to the Office for National Statistics (ONS).

The ONS said that the growth was partly explained by ‘increased public sector employment driven by the government’s response to the coronavirus (COVID) pandemic’.

In April 2021, the gap in employee workplace pension participation rates between the public (91%) and private sectors (75%) was among its lowest levels, mainly driven by increased participation in the private sector up from 32% in 2012.

Becky O’Connor, head of pensions and savings at Interactive Investor, said: If we want more people to be less dependent on the state pension in retirement, it would help if the boundaries around auto-enrolment participation are relaxed.

The disparities between public and private sector pension provision must also be urgently addressed. There is significant pension inequality between employees who are employed by the public sector with defined benefit schemes and those with defined contribution schemes in the private sector. This is already apparent among current retirees, who have vastly different living standards depending on who they used to be employed by, O’Connor said.

The ONS said differences in pension type by sector may explain disparities in estimates of average-active workplace pension value as the private sector, at £10,300 ($13,451.34) makes six times less than the public sector at £65,400 ($85,409.46).

The figures show that while employee participation in the private sector in DB pensions fell from 7% from 8% in April 2020, in the public sector, 82% per cent of employees contributed to DB pensions, up 2 percentage points since April 2020.

People working in accommodation and food services had the lowest participation rate in April 2021 (51%).

Only 43% of the lowest earning full-time private sector employees earning £100 ($130.60) to £199 ($259.89) per week were participating in a pension, around half the rate of equivalent earners in the public sector.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.