Reaction to ONS employee workplace pensions data

Commenting on the employee workplace pensions data published by the ONS today, Hannah English, Head of DC Corporate Consulting, Hymans Robertson, said:

“The data from the ONS today offers a valuable snapshot of how people across the UK are saving for their futures. DC schemes continue to grow in use amongst employers as their main workplace pension. This ongoing shift in the types of schemes people are saving into underlines how important it is for employers to step up their role in supporting long term financial wellbeing.
 
“It’s also important that employers understand how their contributions will support their employees' outcomes; the data highlights that the median employer contributions for females and males in private sector schemes are 5% and 6% respectively. While the disparity between males and females is disappointing, it’s promising that these appear higher than auto enrolment minimums. However, assuming staff are only paying similar rates may not mean all savers will be able to achieve an adequate income in retirement. This could lead to workforce planning issues if not understood. Our own recent research suggested two in three employers are defaulting their employees at a total contribution level of 10% pa or less, meaning for an average earner they would only have a 31% chance of achieving a moderate income in retirement. We believe a minimum contribution of 12% is needed to provide adequate retirement incomes.
 
“Participation alone isn’t enough. Employees with DC pension schemes need clear, consistent communication from employers about the benefits of saving into a pension and how contributions today can shape retirement outcomes. It's essential that employees understand the value of what they’re receiving. Stronger engagement and better information to staff combined with adequate reward packages will help more people make informed decisions about their savings and build confidence in their retirement planning.”

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