UK. Millions risk a ‘minimum wage’ old age
Millions of workers are facing a “minimum wage pension” as automatic enrolment contributions are too low, experts warned yesterday. The amount put into employees’ “defined contribution” pots has fallen dramatically in six years.
The average amount saved into pensions by employees and their employers was 3.4 per cent of salary in 2017, falling from 4.2 per cent in 2016 and from a 9.7 per cent high in 2012.
This is despite the number of people saving for their old age reaching a record high.
Figures from the Office for National Statistics show that membership of workplace pension schemes in the UK was 41.1 million last year – up from 39.2 million in 2016.
But although more people are saving, overall contributions are down.
And the trend could have major implications for the 9.8 million people who have been introduced to workplace pensions since automatic enrolment began in 2012.
Pension provider Aviva calculates that, at current minimum payments, a typical 22-year-old is on track for an income in retirement equivalent to just £6.55 per hour – less than today’s national minimum wage of £7.83.
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