Pensions - Articles - ONS latest research into saving for retirement

For the first time, people were more likely to only pay into a defined contribution pension (26%) than a defined benefit pension (23%). Between April 2018 and March 2020, more people below State Pension age (57%) were actively saving for retirement using private pensions than before automatic enrolment was introduced in 2012 (43%).

 There is huge inequality in pension saving:
 those who are self-employed, have a long-standing illness or disability, or from minority ethnic groups, having lower pension wealth
 one-tenth of the population held more private pension wealth than the rest collectively

 Andrew Tully, Technical Director at Canada Life commented: “These figures confirm we have passed ‘peak-DB’ with more people now saving through defined contribution schemes, and over the next 10 years it is likely the majority of people approaching retirement will only have defined contribution savings. That brings the sustainability of pension income into sharper focus as many recent retirees have had a based of defined income to underpin their DC savings. Some of these retirees with only DC savings may wish to use part of their pot to purchase an annuity later in life to give an element of guaranteed income on top of the state pension.

 “The figures also confirm the huge inequality in pension saving. Self-employed saving are less likely to contribute to pensions and this gap is increasing over time. Giving self-employed greater incentives to save in a pension, or allowing them to access their funds in certain circumstances to help their business, may be worth considering. While automatic enrolment has been a huge success, we need to move forward with the proposed changes extending coverage to younger and lower paid individuals so they can benefit from an employer’s pension contribution.”

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