Whilst the latest data from the Office for National Statistics (ONS) shows auto-enrolment has boosted workplace pension participation, it has also shown that most are not saving enough for retirement, according to Financial Planners.
The workplace pension participation rate was 79% in April 2021, the most recent data available from the ONS.
This means that 22.6m workers in the UK have a workplace pension.
Workplace pension participation was 75% in the private sector. Prior to auto-enrolment it was just 32%.
However, Financial Planners told Financial Planning Today that millions are still at risk of running out of money in retirement as they are only contributing the statutory minimum contributions.
Joshua Gerstler, Chartered Financial Planner at Borehamwood-based The Orchard Practice, said: “Most of the UK population will be unable to enjoy their retirement on the state pension alone, so it is great to see people taking ownership of their retirement by participating in workplace pensions and personal pensions. The next challenge is to get people to realise how important it is to contribute in excess of the statutory minimum contributions. The pensions time bomb is ticking and the statutory minimum contributions are not enough to defuse it.”
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Adrian Kidd, Chartered Wealth Manager at Aylesbury-based EQ Financial Planning, said: “While this report may appear like good news, the numbers that really matter are what people are contributing. I suspect, and fear, that rates of contribution are nowhere near what they need to be and that any plans to uplift contributions among employees will be shelved to pay for higher living costs elsewhere. The current level of inflation poses a real threat to people’s desire to contribute more to their pensions.”
According to the ONS data, participation was much higher for those employees eligible for auto-enrolment. Around 8 in 10 eligible employees had a pension compared with 2 in 10 employees aged 16 to 21 years.
In April 2021, workplace pension participation was the lowest for private sector full-time employees earning £100 to £199 per week (43%). These employees fall below the earnings trigger for auto-enrolment.
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