If you are covering the Department for Work and Pensions’ latest workplace pension participation and savings trends release, please see the following comment from Ian Browne, retirement expert at Quilter:
“Since its introduction in 2012, automatic enrolment has radically transformed the savings landscape and is engaging more and more workers with their retirement savings, and from an earlier age. An all-time high of 88% of eligible employees participated in a workplace pension in 2019, considerably more than in 2012, and more money than ever is being put aside for later life.
“The biggest achievement has been narrowing the gap in pension provisions between the public and private sector. The private sector traditionally lagged far behind the public sector when it came to employee participation in workplace pensions, but since 2012 the gap has narrowed considerably to only 6 percentage points, from 46 percentage points in 2012.
“Despite the provision gap narrowing between the public and private sector, there is still a persistent gap in the level of benefits accrued between the sectors, given the average annual amount saved per worker in the private sector is considerably less than in the public sector as a result of the generous nature of public sector pensions.
“But while the policy has had considerable success in many areas, participation gaps remain, particularly across different ethnic groups. Although participation has increased amongst the Pakistani and Bangladeshi ethnic group from 36% in 2011/12 to 61% last year, this pales in comparison to the white ethnic group, which has the highest participation rate of any ethnicity at 81%.
“The success of automatic enrolment in boosting pension participation must serve as a reminder of the need to extend the policy to incorporate other types of workers, such as the self-employed, who fall outside of the scope of automatic enrolment and are falling behind when it comes to retirement savings.
“Research from the PPI shows that only 15% of the 5 million self-employed people in the UK were saving into a private pension in 2019*. Disappointingly, trials in which self-employed people are prompted to engage with pensions themselves have so far yielded disappointing results, so this must be an issue looked at closely by the DWP in future, especially after many self-employed workers have suffered a financial shock thanks to Covid-19 and fall outside the scope of government support schemes.”
*Pensions Policy Institute, Automatic enrolment is a success worth building on, 2020.