Figures released by the ONS have revealed that during 2013, private sector pension scheme membership reached its highest level since 1953. The report revealed figures which showed a reverse in the nearly continual decline of workplace pension membership between 1967 and 2012.
Last year was the first time that the percentage of workers paying into a pension scheme has increased since 2006, with employee membership growing from 36% in 2012 to 40% in 2013.
Pensions scheme membership lowest among 16 to 21 year olds
Membership is at its highest in the 50 to 54 age group with 62% of females and 63% of males paying into pensions. The report also found that in the age group of those aged 16 to 21, only 10% of both men and women belonged to a pension scheme.
Only one in five adults are paying into a pension
Despite the number of people saving for pensions going up, only 20% of workers are saving for retirement. The ONS report stated “People are living longer and are likely to enjoy a longer retirement. But many are not saving for retirement at all, and many are not saving enough.”
Auto-enrolment is boosting numbers
Auto-enrolment, which was rolled out in October 2012, sees a slice of worker’s pay packets automatically set aside in a savings pot. It is feasible that this new savings tactic is one of the main factors in increasing pension membership during 2013.
Auto-enrolment means that most employees will be guaranteed a pension unless they themselves have chosen to opt out. The earlier workers start saving for a pension, the more comfortable retirement will be. With auto-enrolment, which is being introduced over a six year period, a solid start should be provided for those who may be neglecting saving for the future entirely, namely younger workers.
Under this new scheme, workers who earn more than £8,105 per year, are over 22 years of age and are under the state pension age will be automatically enrolled. It is possible to opt out of the scheme but workers must take into account that they will then miss out on the portion of money which their employer will also be paying into their fund.
It’s now important for employers to plan ahead if they are to sufficiently prepare for the staggered introduction of auto-enrolment. There is plenty of information available about the process and any opt-out procedures if that is the choice of the employee.
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