Membership of occupational pension scheme membership has risen to a record high of 45.6 million people as of the end of last year, according to the Office for National Statistics (ONS).
In its Occupational Pension Schemes Survey – published today (20 June) – also revealed active membership has risen to 17.3 million people, another record high for the data series.
Average contributions to open private sector defined contribution (DC) schemes also increased from 3.4% in 2017 to 5.0% at the end of 2018, largely due to the increase in minimum auto-enrolment (AE) contributions. This comprised of 2.7% from members, and 2.3% from employers.
It is the sixth consecutive year that occupational scheme membership has risen, matching the same period as during which AE was rolled out to all workers earning over £10,000 from a single job, with staging for employers completing last year.
Total membership represents around 69% of the general population, including those not of working age, as measured by the ONS in 2017.
In particular, the private sector saw a 25% increase in the number of people saving into occupational schemes over the course of 2018, rising from 8.8 million to 11 million people.
Over the course of the last six years, private sector membership has soared 407% from 2.7 million people.
Pensions and financial inclusion minister Guy Opperman said the figures showed “just how successful” the AE reforms have been.
“They tell a story of millions of people now building a pension pot for their future and looking forward to a better retirement,” he added.
DC contributions lower than DB
During the same period, however, overall defined benefit (DB) membership has fallen from 1.7 million to 1.1 million people.
Yet, DC contributions are vastly lower than the average 25.6% rate going into DB schemes, highlighting the stark difference in retirement income likely to be experienced by younger workers who have been auto-enrolled.
Royal London pension specialist Helen Morrissey said: “If this disparity is not addressed, we risk a lost generation of people who missed out on final salary pensions but are simply not putting enough into their new-style pension.
“AE was a great start, but this is simply the end of the beginning. Rather than government and industry pat itself on the back for a job well done, the drive to increase contributions to realistic levels needs to move forward in earnest.”
Many in the industry have called for AE minimum contributions to be raised to 12%, or even beyond, but the government has resisted this while it measures the impact of the recent stepped increases in contributions from 2% to 5% in April last year, and then to 8% this April.
Buck head of DC wealth Mark Pemberthy said, without raising rates, most members would not have the size of pot “they want or expect in retirement” and this was “storing up future problems for employees and employers alike”.