A record 77% of UK employees were members of a workplace pension scheme last year, official figures show.
The Office for National Statistics (ONS) said it is the highest membership rate since comparable records started in 1997, creeping up from 76% in 2018.
Workplace pension scheme membership has surged by 30 percentage points compared with 2012 – the year that automatic enrolment into workplace pensions started – when just 47% were in schemes.
The ONS said the youngest employees directly affected by workplace pension reforms – those aged 22 to 29 – have seen the biggest jump in workplace pension membership since 2012, growing from 31% to 80% in 2019.
And for the first time since the records started, there are now more members of defined contribution (DC) schemes than defined benefit (DB) schemes such as final salary pensions.
In 2019, 77% of UK employees were members of a workplace pension scheme, up from 47% in 2012 when auto enrolment began.— Office for National Statistics (ONS) (@ONS) March 4, 2020
This is the highest membership rate since comparable records began in 1997 https://t.co/vaeFs3MEJ1
Some 26.8% of employees were members of occupational DB schemes in 2019, while for occupational DC schemes the percentage was 27.7%.
DC schemes are the type of pension that employers will often enrol workers into under automatic enrolment, as many final salary schemes which promise workers a certain level of income in retirement have closed to new members due to being expensive to run.
With DC pensions, the people saving into them bear the risk of how much income they will end up with in retirement, depending on factors such as contribution levels and investment performance.
The report also highlighted a pension membership gender gap within the private sector.
It said that, among private sector employees, a gap persists, with more men (77%) having a workplace pension than women (69%).
Workplace pension membership for full-time employees across all earning bands was higher in the public sector than the private sector in 2019, the report said.
Tom Selby, a senior analyst at AJ Bell, said: “Automatic enrolment has succeeded in dramatically boosting the number of people saving into a workplace pension. This has been no mean feat, particularly as most people have chosen to continue saving for retirement even in the face of rising minimum contributions.
“The fact there are now more defined contribution scheme members than defined benefit is testimony both to the success of auto-enrolment and the continuing demise of guaranteed pensions in the private sector.
“While many will lament the slow death of DB, DC is the future of retirement saving in the UK and the focus needs to be on making this avenue as attractive as possible for savers.
“Women continue to lag behind men in both the amount they save for retirement and private sector workplace membership. This membership gap is likely, at least in part, due to more women earning below the auto-enrolment earnings trigger of £10,000, but nonetheless boosting the pensions of women should be a key focus of this and future governments.”
While a record number are saving in pensions, millions are still saving at inadequate levels, and many are missing out altogether – either because they are too young, low-earners or self-employedAlistair McQueen, Aviva
Alistair McQueen, head of savings and retirement at Aviva, said: “While a record number are saving in pensions, millions are still saving at inadequate levels, and many are missing out altogether – either because they are too young, low-earners or self-employed.
“Auto-enrolment must be celebrated for bringing many more people into pension saving but we mustn’t be complacent.
“Recent Aviva research amongst UK workers aged 45-plus suggests 32% believe they will not have enough money to retire when they choose, while 45% are worried they will not have an adequate retirement income.”
Minister for Pensions and Financial Inclusion Guy Opperman said: “These statistics show automatic enrolment has been an unparalleled success, transforming pension saving for millions of people.
“And separate figures released last month show the saving habit is sticking too, with numbers of those stopping saving remaining low as people recognise the importance of putting money towards their retirement.
“I want people to save even more, if they can, to make sure the retirement they get is the retirement they want.”