Home Business NewsBusiness This is how Covid has impacted pensions

This is how Covid has impacted pensions

by LLB Reporter
28th Jun 22 11:16 am

The Office for National Statistics has published workplace pension participation and savings trends 2009 to 2021.

The key finding is that 88% of eligible employees, 20 million people, were participating in a workplace pension in 2021. Participation has increased overall in the past decade since auto-enrolment was introduced in 2012, when it was 55%, driven by increases in private sector participation. Public sector participation has remained consistently high.

Covid impact on pension participation

In 2021-22, fewer people chose to stop saving into their pension. However, the ONS found that since Q4 2019 to 2020, the proportion of employees contributing at least 6.5% of their earnings fell slightly from 46.7% to 45.4% in Q4 2021 to 2022.

Where are the gaps?

The ONS found that the largest increases in participation were in agriculture and fishing, hotels and restaurants and among employees of private employers.

However there was relatively low participation of below 65% among eligible employees of ‘micro employers’ – those with 1 to 4 employees, in which participation is 57% and among Pakistani and Bangladeshi employees.

Participation is higher among higher earning employees and those working for large or very large firms than those in lower income brackets and people working for smaller firms. Participation in the private sector was at 80% of employees earning £10,000 to £20,000 and 92% for those earning more than £60,000.

Women were more likely to be participating in a workplace pension than men, at 89% compared to 87% overall. Historically, men working in the private sector were more likely to be participating in a work pension than women and levels have been equal since 2018, however in 2020 to 2021, participation among women edged up to 87%, compared to 86% of male private sector employees. Despite higher participation among women, they also generally have lower pension savings than men.

There has been a rise in the participation of non-eligible employees who, for example, earn below the auto-enrolment trigger of £10,000 but above the lower earnings limit of £6,420.

Becky O’Connor, Head of Pensions and Savings at interactive investor, the pension and investment platform, said: “The tide of pension participation has been rising steadily into a glorious swell over the last ten years, thanks to auto-enrolment, but it hasn’t lifted all boats.

“Gaps in participation remain and must be a priority for policymakers so that the UK’s divided retirement outlook doesn’t persist. Everyone should have easy access to decent retirement savings options through work.

“The level of contributions also must increase, as while higher participation in pensions is the first door to unlock to better retirement outcomes, the second is to get more money going in.”

Leave a Commment

You may also like

CLOSE AD

Sign up to our daily news alerts

[ms-form id=1]