New figures show that the number of people saving into workplace pensions continues to rise and has increased by 4.4 million since 2012.
This policy – which was launched in 2012 and will be fully rolled out by 2018 – has arrested the decline in pension saving over the past decade. With millions of people set up in a workplace pension, workers can benefit from years of saving which will give them greater financial security in retirement.
A key reason behind this huge rise is the number of people being automatically enrolled into workplace pensions. Recent analysis by the Institute for Fiscal Studies shows that between 2012 and 2015, 95% of the rise in private sector membership was the result of automatic enrolment.
Minister for Pensions, Richard Harrington said: Today’s report demonstrates how automatic enrolment is helping millions of working people save for their retirement, so they can look forward to extra income on top of their State Pension and a better standard of living as a result.
It is clear automatic enrolment is playing a key role in shaping the retirement landscape for generations to come. However I want to build on this success and will be looking at how we can get even more people saving, and saving more.
In 2015, the annual total amount being saved by employees was £81.8 billion, an increase of £1.4 billion from 2014 and a further £7.1 billion since 2012.
The amounts people are saving are set to increase as minimum contribution rates are scheduled to rise from 2% to 5% in April 2018, and from 5% to 8% in April 2019. To help employers and their employees adjust to the costs, the contribution level is being phased in over the next few years.
The latest analysis estimates there will be an extra £17 billion of workplace pension saving per year as a result of automatic enrolment by 2019/20.
We will announce the scope of the 2017 review of automatic enrolment before the end of the year. The review will help ensure that automatic enrolment continues to work for employers and individuals alike.
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