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Recession fuels decline in pension contributions
The number of people saving into a pension scheme has dropped by almost a half during the past two decades, new figures have shown.
According to the Office for National Statistics (ONS), the number of people paying into a private sector pension scheme fell from 6.3 million in 1991 to 3.2 million in 2009.
There was a particularly sharp decline in pension saving during recent years, as the recession squeezed the budgets of households throughout the UK
The ONS found that total contributions to all personal pension plans fell from £20.9 billion in 2007/08 to £18.7 billion in 2009/10 – a fall of around 10%.
The findings have led to fresh warnings over the pensions crisis, with some experts suggesting that Britons are falling into a ‘vicious spiral’ of reducing their savings when the need to prepare for retirement is becoming increasingly important.
Lord McFall of Alcuith, the former chairman of the Commons Treasury Select Committee and chairman of the Workplace Retirement Income Commission (WRIC), said: ‘At a time when people need to save more for a decent retirement they are reducing their commitments.
‘This is a vicious spiral which needs to be addressed by the Government and the regulators. They must ensure that we have promote a culture of saving in the UK.’
However Michelle Mitchell, from the charity Age UK, said the forthcoming reforms to the pensions regime would help to curb the decline in pension saving.
‘The roll-out of automatic enrolment into a workplace pension, starting next year will help as most employees will have the right to a pension contribution from their employer,’ she said.