Retirement plans are commonly better supported by workplace pensions than by the State Pension. But while auto-enrolment is a legal requirement for most,1 the differences in employers contributions can prove a major factor in comfort during retirement.
Research from Profile Pensions finds which industry’s employers offer the highest level of contributions – that is, how much they pay into pensions as a percentage of salary, including how that differs by gender.
No tension pensions
With a target pot of £38,000 to live modestly in retirement, and £247,000 to live comfortably, retirement planning is a crucial financial consideration across all industries. These sectors, however, offer the best pension planning with high contributions from employers:
- Financial and insurance work – With employer contributions of an average of 9.5%, finance is the best industry for getting support – and with an average salary of £30,403, it’s one of the best-paying options around. With 54,446 jobs on the market in the UK, there are a lot of opportunities going around.
- Education – Teachers are among those with the best pension options, with average contributions of 9.3%. The average salary of £22,146 means those contributions reach an average of £2,053.60 annually. Teachers are also in high demand, with 102,805 job openings available.
- Electricity, gas, steam, and air-conditioning supply – Significantly lower than the prior two industries with average contributions of only 7.1%, this industry’s £23,943 average salary only results in contributions of £1,703 – though this is still among the top options.
At the other end of the scale, however, agriculture, forestry and fishing jobs offered the minimum legal contribution, 2%, when the ONS statistics were last published in 2018 prior to the April 2019 rise. While it’s scarcely more in accommodation and food services, at 2.1%. The third worst is the arts, where it reaches only as high as 2.5% on average.
The gender gap
While overall there was a slightly higher contribution rate for men than women – at 4.6% compared with 4.4% – in individual industries the range varies significantly.
The average difference in industries was marginally in favour of women, though only by 0.1%. Education, in particular, favoured women, with an average employer contribution of 9.3%, while men received only 7.9%.
In technical areas, however, men saw higher contributions. In electricity, gas, steam, and air-conditioning supply, for example, they saw 3.3% higher contributions, at 7.4% compared with 4.2%, and in manufacturing, there was a difference of 0.9% (5.3% to 4.4%).
Michelle Gribbin, Profile Pensions’ Chief Investment Officer said, “The difference between industries is remarkable. While some you might expect, like financial and insurance industries, the high pensions in education mean teachers are likely to be better off in retirement than those in typically high-earning careers like real estate or logistics. Providing an interesting consideration for both employers and employees.”
“As for the gender differences uncovered, this is just another example of the gap between genders in the workplace, this time played out through pension contributions.
“Generally, we know women are more likely to have lower incomes and more interrupted careers as a result of their caring responsibilities. Ensuring this doesn’t penalise them is as much of an organisational culture issue as it is a government policy issue.
“Firms should really start to get to grips with the fundamentals and fully adopt a policy of ‘equal pay and pension contributions for equal roles’, applied to both full time and part time workers. As a further step, firms regularly reporting on gender disparities in income and pension contributions really helps ensure good transparency and commitment on this issue.”