The total pension savings per individual in workplace schemes reached £5,110 in 2017, the lowest level for a decade, according to the latest data.
The Department for Work and Pensions (DWP) today (5 June) published statistics about workplace pension participation and savings trends.
They showed 84 per cent of eligible employees saved into a workplace pension in 2017, up from 77 per cent in 2016.
The total amount saved in workplace pensions increased by £4.3bn to £90.3bn in 2017, with employers paying in £53.8bn during the year, while employees contributed £27.5bn.
However, the amount of savings per individual dropped from £6,645 in 2007 to £5,110 in 2017.
The data shows that participation in defined contribution (DC) pension schemes hit a record high among all ages.
According to Alistair McQueen, head of savings and retirement at Aviva, the “time has come now to look beyond the number of people saving”.
He said: “We are accepting that automatic enrolment is delivering that, and today's numbers show record high levels of participation.
“Within those records, the credit goes to the under 30s, which are at a record high of 79 per cent.
“Saving is up and in line across all ages, so the narrative that the younger people aren't saving is put to bed with these latest set of figures.”
Mr McQueen argued that the attention needs to be moved to the level of savings, which is continuing to fall.
He said: “My interpretation is that new savers, especially young savers, are increasingly saving at the automatic enrolment minimums, which were set as such, but have become the default level of saving for millions of people.
“Our estimative is that these people are going to be set for big disappointments when they reach retirement.
“Most people would traditionally aspire for an income in retirement of about two thirds of their salary, if they're going to sit at those minimum levels they're going to earn about less than half of their salary when they get into retirement.”
Auto-enrolment minimum pension contributions increased in April, from 2 per cent to 5 per cent.
In 2019 it will increase again to 8 per cent, with the employee paying 5 per cent.
There are now more than nine million people auto-enrolled in a workplace pension scheme.
Mr McQueen added: “We now need to strongly consider increasing the minimum levels of savings.
“We believe that over the next decade, by 2028, those levels need to raise from 8 per cent to 12.5 per cent.”
Nathan Long, senior pension analyst at Hargreaves Lansdown, argued that the "number of people saving for retirement continues to soar, although the amounts being put aside are plunging".
He said: "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.
"Persistency levels took a dip, but this is likely to be a quirk small of the employees of the most recent companies to have enrolled, as many small businesses rarely had a workplace pension in the past."
maria.espadinha@ft.com
