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Two-thirds under-saving for retirement

Two-thirds under-saving for retirement

Two thirds of DC members receive employer contributions of less than four percent, Hargreaves Lansdown reports.

The ONS has today released Active members of occupational pensions-employer contribution rates. Key points are; In 2013 22 percent of active members of occupational Defined Contribution (DC) pensions had employer contribution rates of “Under 4 percent”, by 2014 this proportion had leapt to 69 percent.

Big jump in number of active members of private sector occupational pensions from 2.9 million in 2011 to 4.9 million in 2014. In 2011 the private sector accounted for 35percent of active pension members, by 2014 it had increased to 47 percent. Nathan Long Head of Corporate Pension Research at Hargreaves Lansdown;Auto-enrolment is working and has brought huge numbers into pensions for the first time, particularly in the private sector. However, it is also responsible for the spike in members receiving employer contributions of less than 4 percent.

The majority of those auto-enrolled will currently be receiving a contribution of only 2 percent, with 1 percent from their employer. When auto-enrolment is fully up and running in 2019 the required contribution will be 8 percent, with 3 percent from the employer. This will still be some way short of the level required which is closer to 15 percent. Pension scheme members and employers shouldn’t assume that because they have dealt with auto-enrolment they can now forget about pension planning, there is still plenty more to be done.’

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