Page 10 - Gi flipbook June/July 2018

NEWS | MANAGEMENT

UK workers face retirement

regrets due to low pension

scheme contributions

THE NUMBER OF UK Three quarters of UK
employees participating employees have an active
in workplace pensions has workplace pension scheme
reached a record high,
according to official figures,
but experts have warned
savers face a shock if
their contributions stay at
minimum levels.
Data from the Office for
National Statistics (ONS)
shows the proportion of
employees who contribute
to a workplace pension
has increased by almost
a quarter since the
introduction of automatic
enrolment in 2012.
Around 73 per cent of UK
employees had an active
workplace pension scheme
in 2017, up from fewer
than 47 per cent five years
previously, representing
almost 10 million people
joining schemes.
The ONS said auto-
enrolment led specifically
to a rise in participation in
defined contribution (DC)
pensions, with around
43 per cent of all UK
employees paying into a DC
pension last year, compared
with 17 per cent in 2012.
However, contributions
have stayed close to with defined contribution cent of our working income. not being auto-enrolled
the minimum levels pension schemes were Most will want more than towards regret and
required, according to The contributing less than one this,” said Alistair McQueen, resentment in later life.”
Independent. per cent of pensionable Head of Savings and Scottish Widows
In April, the minimum earnings, and only around Retirement at Aviva. retirement expert Robert
overall contribution rate to one in three employees “It’s great that people Cochran warned that
an automatically enrolled were contributing three per are saving for retirement, auto-enrolment “may well
pension rose from two per cent or more; a reduction but the next challenge is to be providing a false sense
cent to five per cent of on average contribution encourage more people to of security”, and said the
an employee’s qualifying rates since 2012. save more. In 2019, minimum company had conducted
earnings. This will rise again This could leave savers auto-enrolment contributions research that revealed
next April to eight per cent. facing a tougher retirement will rise to eight per cent of only 56 per cent of people
The ONS found that than they envisage. earnings. Aviva advocates are saving enough for a
employee contributions were “The minimum levels that many should aim for comfortable retirement.
concentrated at low levels are designed to generate nearer 12 per cent. “More needs to be done to
in 2017. Around 45 per cent an income in retirement “We must ensure that encourage greater levels of
of private sector employees equivalent to about 40 per millions of new savers are saving,” he added. ■

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News.indd 5 17/05/2018 13:50