Today (Monday 26 March) new ONS figures on workplace pensions show a stark disparity between private and public sector pension schemes, with contribution rates significantly lower in the private sector than in the public sector. Key findings include:
- Nearly half (48%) of all private sector workers are contributing 2% or less, while almost half (48%) of public sector workers contribute 7% or over;
- 81% of low earning public sector workers (on weekly salaries between £100 to £200) pay into pensions schemes, while just 27% in the private sector on the same salary pay into a pension scheme;
- Over half (58%) of private sector employers pay up to 4% contributions, while over 90% of public sector employers pay a contribution rate of 12% or more;
Commenting on the figures Craig Muir, pensions expert, Royal London said:
"Across both employees and employers, the private sector is paying significantly less into pensions. In the public sector signing up to a pension, regardless of salary, is the norm. While in the private sector, most wait for the automatic enrolment threshold to kick in.
Contribution rates are set to improve in the private sector from April this year when the statutory contribution level increases to 5% between worker and firm, and then 8% from April 2019. However, this will still be much lower than the rates for the majority of current public sector schemes.
These figures act as a stark reminder that we still have a long way to go on the automatic enrolment journey. Clearly more needs to be done to get contribution rates for workers in the private sector up to much more realistic levels."
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About Royal London:
Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.