POSTED: March 12 2020
Pension contribution chasm

Pension contribution chasm

More work needed to stop the contribution ‘chasm’ in workplace pensions. Record numbers are now saving thanks to Auto-enrolment but  millions are still missing out.

Auto-enrolment has been a success in broadening out pension provision in the UK. In 2019, 77% of UK employees were members of a workplace pension scheme; this is up from 47% in 2012, when auto enrolment began, and is the highest membership rate since comparable records began in 1997.

Contributions between Defined Benefit (DB) schemes, where a specific level of retirement income is defined and Defined Contribution (DC) schemes or group personal pensions (GPPs) or group stakeholder pensions (GSPs) where the benefits are determined by the contributions paid into the scheme and investment returns. Currently 93% of public sector employees with a workplace pension contribute at least 5% of their pensionable earnings to their workplace pension. This compares with 27% contributing at this level in the private sector.

Aviva’s head of savings and retirement, Alistair McQueen says: “We must not let today’s headline figures convince us that our work is done. 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.

“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.”

To address this issue Aviva advisers employees to be saving around 12.5% of their income each month into a pension, and suggests people should look to accumulate a fund of at least 10 times their salary before they retire.

Helen Morrissey, pension specialist at Royal London commenting on ONS data on workplace pension scheme membership. “Data shows membership of workplace pension schemes is at an all time high with membership among younger workers particularly strong. This is a great foundation but only the start.

Given the gaping chasm that remains between the level of contributions across DB and DC pensions we need to look urgently at how we can boost the level of DC contributions to ensure people get a decent retirement income.”


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  1. ONS data can be found here: