• Savers’ paid 11% less into workplace defined contribution (DC) pension schemes as Coronavirus hit the UK, new ONS data shows (https://www.ons.gov.uk/economy/investmentspensionsandtrusts/bulletins/fundedoccupationalpensionschemesintheuk/october2019tojune2020)
• Employee contributions fell by 11% between Q1 (January to March) and Q2 (April to June), while employer contributions were down by 5%
• Workplace DC membership held firm at 23 million at the end of June 2020 – the same figure recorded three months earlier
Tom Selby, senior analyst at AJ Bell, comments:
“With the UK currently in the grip of the second wave of Coronavirus, we are now getting a clearer view of the impact the first wave of the pandemic had on people saving for retirement.
“Inevitably the national lockdown hit savers hard, with employee pension contributions down 11% and employer contributions 5% lower.
“This drop in contributions likely reflects the impact of furloughing, with total auto-enrolment contributions based on 80% of salary for millions of people. Some workers will also inevitably have opted out due to pressure on their incomes caused by the pandemic.
“Given total workplace pension membership had been increasing steadily up until March, it seems likely the figure recorded in Q2 2020 of 23 million is lower than it might have otherwise been. Membership of defined benefit (DB) schemes was also broadly stable during the period.
“With the vaccine programme boosting hopes of an economic recovery in the second half of 2021 and beyond, those who have hopped off the retirement saving horse should get back on as soon as they can.
“In doing so, they will benefit not only from a matched contribution from their employer but the added bonus of pension tax relief.”
