Millions of employees sleepwalking in the direction of poverty during their retirement, despite the fact that record numbers are being paid out to a pension, experts warn.
The Office for National Statistics said there were 41.1 million members of an occupational pension scheme in 2017 compared to 39.2 million in 2016.
The number of active members – those who still make a contribution – rose from 13.5 million to 15.1 million because more and more members take part in pension schemes through automatic registration.
Shrinking pension fund: automatic registration was introduced in 2012 and requires employers to place all eligible employees on a pension plan
Car registration was introduced in 2012. It obliges employers to place all eligible employees on a pension scheme so that pensioners have enough money to support them in old age.
But Alistair McQueen, head of sparing and retiring at Aviva, warned that many still face an income after work below the minimum wage, which is currently £ 7.83 per hour for people over 25 years of age.
He said: & # 39; Millions of employees have embraced the automatic registration since 2012 in the belief that it will provide them with a comfortable retirement. But on the basis of the current system and the ONS data, they are in shock.
& # 39; Many are currently on their way to living with less than the minimum wage from retirement. & # 39;
The report showed that the vast majority of employees in the public sector have an occupational pension, with 6.3 million active members of pension schemes for public sector workers compared to 8.8 million private employees.
This is despite the fact that five times more people work in the private sector – indicating that only a minority in the private sector is actively saving for a pension.
ONS data have previously shown that employees in the public sector usually have a pension fund of £ 80,600 compared to £ 15,300 managed by private sector employees.
While more employees in the private sector are saving, the premiums are decreasing to the minimum number of automatic registrations.
From a peak of 9.7 percent of the salary in 2012, the average fell by more than half to only 3.4 percent in 2017 – 1.2 percent of the employee and 2.1 percent of the employer.
This decrease can be attributed to the low minimum contributions for automatic enrollment that drag the average down.
Since the introduction of automatic registration in 2012, until April of this year, the minimum contribution was 2 percent – or 1 percent each of the employee and the employer. It has now risen to a total contribution of 5 percent.