Pensions have jumped in popularity again over the past year with 84 per cent of workers now saving for retirement, new official figures reveal.
That is a comfortable rise from 77 per cent a year ago, and marks a massive change in people’s savings behaviour since 2012 when just 55 per cent were putting money into a pension.
But how many people save can change dramatically by job. Pension participation was highest in the energy and water industry at 91 per cent and lowest in agriculture and fishing at 69 per cent in the past year.
Charts from the DWP show the percentage of people saving into pensions
Likelihood of having a pension across industries since 2007
Likelihood of having a pension across occupations since 2007
The annual amount saved into pensions has also increased by 5 per cent to £90.3billion in the past year.
But the headline figure disguises a drop in average personal savings to £3,873 a year, including both worker contributions and employer top-ups.
That is because the big auto enrolment drive means a lot more people working in the private sector now have a pension, but the minimum savings rate was just 2 per cent until April this year, although it has now risen to 5 per cent and will go up again to 8 per cent in April 2019. This has reduced the average sums people are putting away.
Willingness to save also remains far more prevalent in some industries and occupations than others, and still tends to be higher in the public than the private sector, according to annual data from the Department for Work and Pensions.
Popular trend: A massive change in people’s savings habits has occurred since 2012 when just 55 per cent were putting money into a pension
Things are changing the figures show, as while pension participation was lowest in agriculture and fishing, the latter industry saw the biggest surge in numbers signing up for pensions last year – from just 44 per cent in the year to April 2016, to 68 per cent last year.
Pensions have still enjoyed the biggest success story in the distribution, hotels and restaurant industry though.
The auto enrolment initiative, which has forced all employers large and small to set up a pension scheme, prompted a leap in participation in this sector from 27 per cent in 2012 to 77 per cent last year.
Meanwhile, among the occupations professional workers remain most likely to have a pension at 89 per cent, and skilled traders such as plumbers, carpenters and welders the least likely to be saving for old age at 77 per cent.
Skilled trader pension participation has risen the most, by 15 percentage points, over the past year though.
However, people in so-called elementary occupations like security guard, postal worker and cleaner are most likely to have joined a pension scheme since auto enrolment, up from 20 per cent of this sector in 2012 to 77 per cent last year.
Proportion of workers with a pension has soared in the private sector
Total amount workers saved into pensions over the past year
The DWP’s latest research also discovered the following about different age groups, earners and types of worker.
* The highest earners on £40,000-plus are most likely to have a pension at 91 per cent, but those in the £10,000-£20,000 band now have a participation rate of 77 per cent and the gap between them has closed significantly since 2012.
* Women and men are almost equally as likely to be saving into a pension in both the public and private sectors.
Male and female participation rates in pensions
* Those working full time are more likely to be saving with a participation rate of 85 per cent, against those working part-time at 78 per cent.
* Regional research doesn’t throw up major differences, although workers in the public sector are the least likely to have a pension if they live in the east of England.
Differences in public and private sector saving between regions
* Older people are most likely to save for retirement but younger workers are catching up due to auto enrolment. In the year to April 2008, 42 per cent of 22 to 29-year olds and 66 per cent of over-50s were saving. By last year, the figures were 79 per cent and 85 per cent respectively.
Pension participation across different age groups
* White people are most likely to have a pension, but there have been large increases in participation across all ethnic groups since 2012, with the most marked rise in the Pakistani and Bangladeshi community.
Pension participation across different ethnic groups
* The self-employed have bucked the trend towards saving more towards retirement, with a marked decline among those having pensions from 30 per cent in the year to April 2008 to 14 per cent last year.
Nathan Long, senior pension analyst at Hargreaves Lansdown, said: ‘The number of people saving for retirement continues to soar, although the amounts being put aside are plunging.
‘The Government’s auto-enrolment regime is responsible, as it throws first time savers into a pension although it currently insists on only very low saving levels.
‘Young people are the biggest winners from the rules as their money works harder for them from a much younger age. The first increase in the minimum saving levels happened in April and will rise again in April next year. By then the picture should be looking far rosier.
‘The self-employed continue to buck the trend of people saving for retirement, as they continue to shun pensions. Many people who work for themselves start off being employed, so capturing their interest early in their career remains imperative.’