UK. Pension contributions hold up well despite Covid

Workers kept up with payments into their pension funds last year, confounding fears that many people might scrap or cut their contributions because of pandemic pressures, according to government data.

Annual savings from eligible savers rose to £105.9bn, from £100.4bn in 2019, said the Department of Work and Pensions in a report on Thursday. That extends the increases posted since 2012, following the introduction of auto-enrolment into work-based pension schemes to boost retirement saving.

The DWP said a fall in employee pension contributions in the first half of the year (when the pandemic struck) was followed by a recovery in the third and fourth quarters “with employee pension contributions increasing in all scheme types”.

The overall increase was driven mainly by a rise of £5.7bn in the public sector, where far fewer workers lost their jobs than in the private sector. But even among private sector workers the decline in the deepest recession in decades was just £200m.

As the DWP pointed out, the gains achieved through auto-enrolment, mainly in increasing participation of private sector employees, have been maintained, with the share of UK employees in pension schemes at 78 per cent, compared with less than 50 per cent in 2012.

The largest advances have come in sectors, where pension schemes were previously particularly under-developed, including in agriculture and fishing, as well as in distribution, hotels and restaurants, and in small companies.

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