Auto-enrolment contributions fall 5.5% in five years

The average amount employees saved into workplace pensions has slumped 5.5% in the five years since auto-enrolment was first introduced.

Figures from the Office for National Statistics (ONS) showed the typical employee/employer contribution fell from a high of 9.7% in 2012 to just 3.4% in 2017.

This is despite the number of employees saving into workplace pension schemes in the UK rising to 41.1 million last year - up from 39.2 million in 2016.

Workers who are aged between 22 and state pension age and earning more than £10,000 a year are automatically enrolled into a workplace pension scheme.

Eligible employees and their employers currently make a combined minimum contribution of 5%, which will rise to 8% from 6 April 2019.

The ONS's findings echo a recent report from the Treasury committee, which called on the government to raise contribution rates beyond 8% in 2019/20.

Alistair McQueen, head of savings and retirement at Aviva, said:

"Millions of employees have embraced auto-enrolment in the belief it will deliver a comfortable retirement, but they are in for a shock with many on the road to living on less than the minimum wage in retirement.

"The proposed minimum saving rate of 8% of earnings, from 2019, is insufficient for millions of workers and we need to agree to further increases in minimum savings.

"Failing to do so will bring misery to millions of workers."

We can help plan your retirement.