The savings experts at money.co.uk best savings account looked at the most recent Office for National Statistics pensions contribution figures to reveal how pension contributions have changed in each industry across the UK over the past years. And from this, the estimated future trends in the next five years.
Employer pension contributions over the last five years
Only three out of 16 industries saw an increase in employer pension contributions at the end of a five-year period from 2017 to the latest ONS figures from 2021.
Public Administration, along with the Education sector, had the highest employer pension contributions at 15-20% in 2017. While Education industry contributions remain the same, Public Administration contributions have risen to above 20%, the highest among all industries analysed.
Financial and insurance sector employer pension contributions increased from 8-10% to 10-12% between 2017 to 2021 and remain at the same level now. For the real estate industry and transportation industry, it fluctuated over time but currently stays in the same 8-10% bracket.
The administration sector had the lowest employer pension contribution, at less than 4% in 2017 and 2018. This increased to 8-10% in 2019 and remains steady.
Table 1: UK pension contributions by industry in 2023
|Electricity and Gas||10 to < 12%|
|Health and Social Work||10 to < 12%|
|Financial and Insurance activities||8 to < 10%|
|Education||15 to < 20%|
|Public Administration||Over 20%|
|Manufacturing||4 to < 8 %|
|Construction||4 to < 8 %|
|Retail & Motor Repair||4 to < 8 %|
|Communications||4 to < 8 %|
|Science professionals||4 to < 8 %|
|Arts & Entertainment||4 to < 8 %|
|Water Supply & Management||8 to < 10%|
|Transport||4 to < 8 %|
|Real Estate||4 to < 8 %|
|Accommodation & Food||Under 4%|
Public administration is the only sector with an expected increase in employer contributions over the next five years
Currently, the public administration industry has the highest employer pension contributions at 20% and above, followed by education at 15-20%. Behind are health and social work and electricity and gas at 10-12%. Out of these industries, education is the only one that will see an increase in pension contributions, rising from the already above-average 15-20% to more than 20% by 2028.
Five industries are set to see a reduction in pension contributions this 2023
Money.co.uk best savings account predicts that six out of 16 industries will see a decrease in employer pension contributions in the next five years, with five industries already experiencing a decrease in 2023. Only retail and motor repair will have more time to prepare for a reduction in pension contributions, which is predicted to happen in 2026, while employees in the construction industry can anticipate it as early as 2023.
Financial and insurance activities currently receive a pension contribution of 10-12% but will see their retirement funds reduce to 8-10% already this year, a number that it’s likely to remain the same until 2028.
Transportation, real estate, and water supply and management have their retirement funds at a bracket of 8-10%. The transportation and real estate sectors are predicted to have it reduced to a bracket of 4-10% already in 2023 until the next five years.
At a current range of 4-8%, the construction, retail and motor repair, and administration industries are expected to fall to below 4% and revert close to the 3% minimum in pension contributions by 2028. Additionally, retirement funds for the accommodation and food service industry is also expected to remain at less than 4% by 2028. The sector has not seen an increase in employer pension contributions since 2014.
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