The number of UK employees in workplace pension schemes reached a record high last year, but one provider has warned this was masking the millions still saving at "inadequate levels".
The most recent data published by the Office for National Statistics yesterday (March 4) showed 77 per cent of UK employees were members of a workplace pension scheme last year.
This was a significant jump from 47 per cent in 2012, when automatic enrolment was first introduced.
It is the highest membership rate since records began in 1997 and is equivalent to about 21.9m people, with a preference for defined contribution pensions clearly taking the lead.
According to the ONS, more employees were members of a defined contribution scheme, at 36 per cent, than any other for the first time in 2019.
But Alistair McQueen, head of savings and retirement at Aviva, said the industry should not be blinded by the figures.
Aviva warned about five million employees were still not in any workplace pension scheme, usually as a result of earning below £10,000 or being aged under the auto-enrolment qualification age of 22, and another five million self-employed workers were excluded from auto-enrolment altogether.
Mr McQueen said: "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.
"Auto-enrolment must be celebrated for bringing many more people into pension saving but we mustn’t be complacent."
Tom Selby, senior analyst at AJ Bell, said automatic enrolment had "dramatically" succeeded in boosting the number of people saving into a workplace pension.
Mr Selby: "This has been no mean feat, particularly as most people have chosen to continue saving for retirement even in the face of rising minimum contributions.
"The fact there are now more defined contribution scheme members than defined benefit is testimony both to the success of auto-enrolment and the continuing demise of guaranteed pensions in the private sector.
"While many will lament the slow death of defined benefit, defined contribution is the future of retirement saving in the UK and the focus needs to be on making this avenue as attractive as possible for savers."
Mr Selby said it was "unclear" what the future held for auto-enrolment reforms, with little update from the government on proposals made in 2017 for qualifying earnings bands to be scrapped.
He added: "Although the current government has other more pressing issues to address at the moment, not least the coronavirus outbreak, setting a course for the future of auto-enrolment and pension saving more generally is crucial to build on the early successes of the reforms.
"Given the importance of this point in time, a new pensions commission may be needed to guide genuine long-term retirement policymaking."
rachel.mortimer@ft.com
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