Department of Work & Pensions data on pension participation is out and the average amount paid into pension by workers has fallen to an all-time low. The annual amount now stands at £3,873 per eligible saver in the private sector. Contributor Nathan Long, Senior Pension Analyst – Hargreaves Lansdown.
The number of self-employed saving into a pension is falling, down to 14% from 30% only ten years ago. This is despite rising participation among all other groups. The gap between the pension participation rates of young and old people has narrowed significantly. 10 years ago 31% of 22 to 29 years olds paid into a workplace pension compared to 56% aged 50 to State Pension Age.
Now 77% of younger workers pay in compared to 82% of older workers. The rate of pension saving persistency has fallen. Persistency is measured by having paid into a pension for at least 3 of the past 4 years.
‘The number of people saving for retirement continues to soar, although the amounts being put aside are plunging. The Government’s auto-enrolment regime is responsible, 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.
The self-employed continue to buck the trend of people saving for retirement, as they continue to shun pensions. Many people who work for themselves start off being employed, so capturing their interest early in their career remains imperative.
Persistency levels took a dip, but this is likely to be a quirk small of the employees of the most recent companies to have enrolled, as many small businesses rarely had a workplace pension in the past.’
