Gail Izat, Managing Director for Workplace Pensions at Standard Life, part of Phoenix Group said: “It’s encouraging to see a continued increase in the number of people saving into workplace pensions in the last year, as well as the modest rise in self-employed people contributing to a private pension. While this is a welcome development, participation among the self-employed remains worryingly well below where it needs to be. Reassuringly, upwards of 90% of people who start saving into a pension continue to do so but it’s concerning that there’s still 8-10% choosing to opt-out, and potentially missing out on a lifetime saving habit. The rise in workplace pension participation is largely driven by the £10,000 auto-enrolment (AE) earnings trigger remaining frozen – bringing more lower earners into the system. Since its introduction nearly 13 years ago, AE has been hugely successful in boosting the number of people saving for retirement, partly offsetting the decline of final salary pensions in the private sector. But it also risks fostering a false sense of security, as current minimum contribution levels fall short of what’s needed to fund a comfortable retirement. This gap is expected to become critical as early as the 2040s. The recently-announced Pension Commission therefore now faces a major challenge in tackling the looming savings shortfall – it must find practical policy solutions capable of securing broad public support while focusing on the groups most at risk of under-saving, including the self-employed. There are, however, reasons for optimism. Auto-enrolment itself was born from a similar commission in the early 2000s. With the right ambition, this new Commission has the potential to deliver equally transformative change - and help ensure far more people can look forward to financial security in retirement.”
Becky O’Connor, Director of Public Affairs at PensionBee, said: “Auto Enrolment has been a success, but with a stabilisation in rates of saving for the majority of eligible workers and persistent gaps among those who are not automatically enrolled, there is a clear-cut case for the Government to turn its attention to how to improve long term saving among those currently left out of the system. The demand for pensions among workers who are not auto-enrolled is there, as rates of pension saving in this group have increased between 2023 and 2024 seemingly organically, so a policy push is likely to be successful and well received. PensionBee’s Invisible Worker campaign highlights that more than a million ‘gig’ economy workers are not currently paying into a pension. PensionBee is calling for reforms that prioritise simplicity, affordability, and broader eligibility.”
David Brooks, Head of Policy at Broadstone, said: “While the DWP’s annual publication of workplace pension saving points a rosy picture with strong and growing participation among eligible employees, there remains cause for concern. One in 10 new savers are opting out of their pensions demonstrating the ongoing battle between longer-term saving and immediate budgetary constraints. The findings released alongside the launch of the Pensions Commission show that nearly 15 million people are under-saving for retirement and nearly half (45%) of working age adults are saving nothing at all into a pension, with lower earners, the self-employed and some ethnic minorities particularly at risk. The Commission demonstrates the Government’s commitment to reversing the inadequate saving and serious inequality with the pensions system. We look forward to working together with the industry so that we can focus on achieving our objective of delivering the best outcomes for the highest number of people in later life.”
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