UK Employee workplace pension membership has risen to 73% in 2017, from 67% in 2016, driven mainly by increases in membership of occupational defined contribution plans within the private sector, according to a report from the Office for National Statistics (ONS).
In 2017, 89% of public sector employees participated in a workplace pension plan, compared with 67% of private sector employees. However, the gap between public and private sector pension membership continues to shrink due to the debut of automatic enrollment in 2012. The ONS also found that the largest growth in pension membership was seen among workers between the ages of 22 and 29 years, which increased to 73% in 2017 from 65% the previous year.
Workplace pension membership for private sector employers with one to 99 employees increased to 52% in 2017 from 35% in 2016, however, this group still had the lowest proportion of employees with a workplace pension within the private and public sectors, said the ONS.
In 2017, 94% of full-time public sector employees with gross weekly earnings of £600 and higher, and 81% of full-time public workers with £100 to £200 gross weekly earnings were pension members. Meanwhile, within the private sector, 87% of higher earners were participating in a pension, compared with only 27% among the lower earners.
The report also found that 48% of private sector pension members in 2017 contributed between zero and 2% of their earnings, which is an increase from 42% in 2016. The growth was attributed to current minimum contribution levels for automatic enrollment.
The Pensions Act 2008 set up a framework for workplace pension reform that was intended to increase private pension participation in the UK. This was later amended to stipulate that, from October 2012 on, all eligible employees are required to be automatically enrolled into a qualifying workplace pension by their employers.
Automatic enrollment applies to eligible employees who are not already participating in a qualifying workplace pension. Employers select a pension plan for their employees, and are required by law to enroll all eligible employees into a pension that meets the qualifying requirements established by the Pensions Act 2008 and Pensions Act 2011, and make contributions on their employees’ behalf. Workers are permitted to opt out of their employer’s pension but, if they are still eligible, they will be re-enrolled after a three-year period.
Tags: Office for National Statistics, Pension, Private Sector Pension, UK