There had been a pattern of decreasing private sector membership from 2002 to 2012. However, male employee membership in the private sector increased from 36% in 2012 to 40% in 2013, and for females membership increased from 26% in 2012 to 31% in 2013. Increases were also seen in the public sector from 2012 to 2013.
The increase in workplace pension membership in 2013 may indicate a change in the direction of pension membership statistics.
According to the report, the increase is due to people living longer and wanting to enjoy a longer retirement. But many people are not saving for their retirement at all, and many that are saving are not saving enough.
It is partly for those reasons that Automatic Enrolment was introduced in October 2012, starting with eligible employees of the largest employers, and it is likely that it is the main factor contributing to the increase in membership in 2013.
Around 46% of employees in the private sector were members of a workplace pension scheme from 1997 to 2001. There was a slight increase in 2002, but this was followed by a general decline to 32% in 2012. From 2012 to 2013, there was an increase to 36%.
Under automatic enrolment legislation, by 2018 all employers will have to automatically enrol eligible employees in a pension scheme. Along with other data sources, future editions of Pension Trends chapter 7 will aim to show the effect of automatic enrolment on pension membership.
Prudential’s Vince Smith Hughes said:
“For the first time since 2006, the number of people taking advantage of workplace pension schemes has increased, reversing a long-term decline in pensions provision in the UK.
“3.3% more workers used their company pension scheme in 2013 than in 2012 – the biggest annual increase on record.
“These figures show that the early stages of auto-enrolment, which guarantees most employees will have a pension unless they choose to opt out, have been a notable success. Although this is encouraging, there is still a long way to go, as more than half of workers (50.2%) are still not members of company pension schemes.
“However, enrolling into a company pension scheme should not be job done for savers – it is just a starting point. Ultimately, the earlier you start saving into a pension, and the more you save, the more comfortable your retirement will be.”
