On the go: Total membership of occupational pension schemes in the UK reached 45.6m in 2018, up from 41.1m in 2017, according to new Office for National Statistics data.
This is the highest level recorded by the ONS Occupational Pension Schemes Survey.
Active membership of occupational pension schemes was 17.3m in 2018, split between the private (11m) and the public sector (6.3m).
Active membership of private sector defined contribution occupational schemes was 9.9m in 2018, an increase of 28.6 per cent on 2017 levels (7.7m).
There has also been a massive rise in deferred pensions, with preserved pensions increasing to 18m in 2018 from 15.8m in 2017.
The increase occurred mainly in the private sector (to 13.6m from 11.6m ) with a smaller rise in the public sector (to 4.4m from 4.3m) – raising the stakes to get the pensions dashboards up and running quickly.
The average employer contribution rates in defined benefit schemes was unchanged in 2018 at 19.2 per cent, with private sector DC schemes very much the poor relation. The average total contribution rate was 5 per cent, up from 3.4 per cent in 2017 – with most employers just paying the legal minimum.
The pension system still has structural faults. Tom McPhail, head of policy at Hargreaves Lansdown, said: “There are nearly 5m self-employed people outside the pensions system, and the government is struggling to find a policy response to this problem. In addition, nearly 10m employed people have been excluded from auto-enrolment because they were not eligible.”
But Tom Selby, senior analyst at AJ Bell, highlighted that there are some improvements coming. For example, plans are already under way to scrap the earnings band in the mid-2020s, so that minimum contributions will be calculated from the first pound an individual earns.
“However, even this is likely to leave the average earner short of achieving their retirement dreams,” Mr Selby said.
“A 25-year-old earning £30,000 and saving at the minimum would end up with a pot of around £200,000 in today’s prices by age 65 – that would buy a guaranteed, inflation-protected income worth about £6,500 at the moment.
“If you combine that with the state pension you’ll be living on around £15,000 a year,” he added.
