Personal pension contributions hit record high of £24.3bn

Personal pension contributions hit record high of £24.3bn

Personal pension contributions hit a record high in 2015/16, with £24.3bn saved in these products, according to data from HM Revenue & Customs.

This was higher than both the £20.3bn in 2014/15, and the previous peak of £20.9bn in 2007-08, ahead of the financial crisis.

The number of savers has also peaked, reaching 9m in the financial year ending in 2016.

But the average annual contribution per individual has fallen from a peak of £3,690 in 2011/12 to just £2,690 in 2015/16.

Kate Smith, head of pensions at Aegon, said these figures “suggest that the population’s pension saving habits are in good health”.

Ms Smith said: “Auto-enrolment has driven much of this increase, and saving into a workplace pension is quickly becoming the norm.”

Since 2012, more than 8.5m more people have begun saving into a workplace pension, while nearly 800,000 employers have met their automatic enrolment duties.

But the changing nature of the workplace, with employees becoming more "fleet of foot", means people may end up with multiple smaller pots which can be challenging to manage, she added.

She said: “If those with a workplace pension are to stand a chance of meeting their retirement goals, it’s critical that they are fully aware of where their various pots are invested.

“The mooted pensions dashboard offers huge promise in this area, and if successful will allow savers, and their advisers, to readily track down, consolidate and monitor pots.”

William Burrows, retirement director at Better Retirement, said it was encouraging to see more people saving into pensions.

He said: “I hope the new pensions freedoms will send out the message that pensions are a good way to save for retirement, because not only is there tax relief on contributions but there is complete freedom at retirement.

“All we need now is a long period without any more government interference or change to the pension rules.”