The level of the UK's pension woes continues to deepen, new figures suggest, with the start of the roll out of the NEST pension scheme in 2012 not coming a minute too soon.
Contributions to personal pensions – including stakeholder pensions – fell by more than £1 billion in the 2009/10 tax year, according to HMRC figures. The majority of the fall can be attributed to the £940 million fall in individuals' contributions to their schemes, with employer contributions remaining stable.
In addition, 430,000 fewer investors saved into a personal pension in 2009/10 compared to 2008/9, going some way to explaining the dramatic fall in contributions. However, even among those who were saving in 2009/10, the average annual contribution fell from £945 to £886.
"Pension contributions are no doubt a tempting cost to cut when times are tough. But if they are never made good this is a problem shelved rather than a problem solved," said Laith Khalaf, pensions analyst at Hargreaves Lansdown.
"This decline in pension saving highlights the importance of the auto-enrolment rules arriving in 2012,"
A separate study conducted on behalf of the Department for Work and Pensions suggests that people have a lack of knowledge when it comes to their company pension.A worrying 30% of employees saving into a company pension said they didn't know how much their employer was contributing.
Under the government plans to implement universal company pensions, employers will be obliged to make a minimum contribution of 3% by 2017, with employees contributing 5% of their pay into their pension pot.The findings also revealed that around six in ten people working in the private sector do not currently contribute to a workplace pension.
"This research confirms the fact that too many people are not saving into a pension, which is why the plans we announced this week to introduce automatic enrolment into workplace pensions are so vitally important," Pensions Minister, Steve Webb, said.
"In 2009 nearly 13 million jobs had no pension provision.
"Our reforms will mean up to eight million people newly saving or saving more with support from their employer, helping to transform people's prospects for retirement."
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