Almost half (46%) of UK workers are not confident they will have enough savings for a comfortable retirement, despite self-enrollment bringing improvements in participation rates, research by Barnett Waddingham has found.
This lack of confidence was more widespread among certain demographic groups, reaching 51% among women, 53% among 35-54 year olds and 68% among those with no other pension than the state pension.
However, Barnett Waddingham suggested that this lack of confidence is “not unfounded”, explaining that while automatic enrollment has increased pension take-up rates, most are not saving the amount they need, while that others pass completely through the gaps.
Indeed, according to research by Barnett Waddingham, one in five Britons (20%) have no private or occupational pension, with this figure rising to 26% for women, compared to 13% for men.
He explained that the strict grouping of auto-enrollment excluded a number of savers, with 13% of working Britons completely excluded from auto-enrollment due to their income structure.
Those earning below the automatic trigger of £10,000 but above the lower earnings limit of £6,240 can opt for an employer pension and receive the mandatory employer contribution.
According to the research, about 14% of people are in this situation, rising to 15% among women and 19% among 18-24 year olds.
However, 11% of those entitled to it based on their income have a defined contribution pension to which they do not contribute, while 20% of those entitled to participate based on their age (22 to 65) do not contribute to their DC pension either.
More generally, the survey found that 70% of people who can enroll say they have, while almost a third (29%) have not and may not benefit from employer contributions and tax relief.
Mark Futcher, Barnett Waddingham’s partner and director of DC, said: ‘Auto-enrollment legislation excludes large numbers of low-income people, including nearly one in ten full-time workers.
“The government has chosen to keep the minimum earnings bracket at £10,000 a year, despite multiple calls to remove it.
“The new Pensions Minister needs to rethink this; if they don’t, it’s up to employers to consider raising the pay of their staff to make up for the lack of long-term savings.
“Separately, of the 20 million people saving in a workplace pension plan, the vast majority are not saving enough. Savings rates have capped at the minimum contribution level.
“The government had a golden opportunity to include a 1% increase in employee contributions every two or three years, which would have brought many people towards the recommended savings rate of 12%.
“Instead, they failed to capitalize on the success; as the cost of living crisis worsens, arguably they missed their chance.”