ONS workplace pension participation statistics, comment from Jon Greer, head of retirement policy at Quilter.
“ONS data released this morning shows that workplace pension participation in the UK has risen just 1% up to April 2021. This is mainly down to the thousands of jobs created by the government to help battle Covid during the early days of the pandemic. Many of the people that took those roles were put into public sector workplace pension schemes as a result boosting participation. However, many of these were transient roles that may well already no longer be in place so this increase could be short-lived.
“While the figures further show that in April 2021, the gap in employee workplace pension participation rates between the public (91%) and private sectors (75%) was among its lowest levels this still represents a significant gap. Although this has improved enormously and is up from up from 32% in 2012, thanks to auto-enrolment, we must still be looking to bridge that gap and ensure that both public and private sector workers are saving sufficiently for retirement.
“Although automatic enrolment has so far proved to be a huge success the real test has begun. The cost-of-living crisis that many are only just starting to feel will stretch finances in a way many have not experienced before. People may choose to opt out of funding their retirement in a bid to have more money in their pocket today. Auto-enrolment largely relies on people’s inertia but significant financial pressures on someone’s finances today may make people take action and reduce or stop pension funding altogether. Although this is understandable, saving for your retirement should be one of the last things you stop doing if money is tight and reducing day to day spending, if possible, should be adopted before any potentially catastrophic financial decisions which will impact retirement are made.
“This increase in living costs will make retirement saving even harder for the large self-employed population in the UK whose finances are often more unpredictable. Many self-employed people have already suffered a significant financial shock during the pandemic and therefore are unlikely to be prioritising their pension provision at the moment as they build up their businesses again. A solution to help prompts this group of workers to save for retirement needs to be looked at urgently as their financial needs differ to much of the rest of the working population and auto-enrolment simply won’t fit with their needs.”
Source: Quilter
