Automatic pension enrolment schemes helps UK workers build retirement savings

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Automatic enrolment into workplace pensions has resulted in approximately 9 million pension savers building up their retirement savings for the first time, the Department for Work & Pensions (DWP) revealed on Tuesday.

The UK ministerial department, which is responsible for welfare and pension policy, said British workers such as sales assistants, technicians and dinner ladies, who did not previously save for their retirement, have been encouraged to make pension savings as a consequence of workplace pension reforms.

These reforms require employers to automatically enrol employees, aged between 22 and state pension age and earning over GBP9,440 per year, into a qualifying workplace pension scheme. Automatic enrolment started with the largest employers in October 2012 and is expected to be complete by 2018.

According to the DWP, new data from the Office for National Statistics (ONS) pension tables within the Annual Survey of Hours and Earnings indicate that since 2011, there are almost one million additional savers in Defined Contribution workplace pension schemes.

Workplace pension schemes for people working in sales and customer service sectors rose by 8%, an increase of 160,000 cashiers, sales assistants, supervisors and related roles, while there was an increase of 130,000 workers in elementary occupations such as security guards, cleaners and dinner ladies who are now in a workplace scheme, a rise of 5%. There was also a rise of almost 1% of employees in caring, leisure and other occupations building up retirement savings, which included 20,000 caretakers, childcare assistants, travel agents and other workers in this sector.

In addition, occupations where pension saving is well established have increased from 2011, with managers, directors and senior officials rising from 31% to 35%; administrative and secretarial jobs increasing from 17% to 20%; skilled trade workers up from 19% to 21%; associate professional and technical rising from 23% to 26%; and professional jobs increasing from 17% to 19%.

Despite an estimated 13 million people not saving enough to provide for a comfortable retirement, the ONS Annual Survey of Hours and Earnings pension tables show that workplace pension saving increased in 2013 for the first time since 2006, the most since 2002.

Steve Webb, Pensions Minister, commented: “The tide is turning for pension saving in Britain after decades of decline. Automatic enrolment is putting pension saving within reach of all workers, whatever job they have, including many on low to middle incomes.

“For the first time, thousands of hardworking people with jobs or businesses that have not traditionally provided pensions can start saving with a contribution from their employer, helping them towards a more prosperous future and restoring fairness in retirement.”

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