Contributions into work-based pensions in the UK hit record high in 2016, according to figures released by the Association of British Insurers (ABI).
New figures from the ABI show work-based pensions hit a record high in 2016, with 7.5m policies now in force; an increase of 725,000 policies (almost 11%) from 2015.
The ABI said that the UK’s Auto-Enrolment (AE) scheme has been the main driving force behind the increase in savings, but has voiced concerns that unless minimum employment contributions rise future retirees could be left with a hole in their finances.
Premium income also topped a record £13.4bn in 2016, an increase of £1.3bn or just over 11% on 2015, with continuing increase in the number of individual work-based pensions also being partly attributed to the introduction of AE.
The ABI said in a statement that as people build up many pension pots with different providers as a result of AE, there is an increasing need for a Pensions Dashboard style service to enable savers to get an overview of all their pension savings online.
Pensions Dashboard for all
The technology to support such a service is near completion but a regulatory framework and government legislation are required to allow a comprehensive service to be rolled out to the public.
The ABI also warns that despite contribution levels rising to 8% in 2019, it will still leave the majority of savers without enough money for retirement.
Yvonne Braun, director of Policy, Long-term Savings and Protection at the ABI, said: “The success of AE shows how the power of policy can benefit society in the long term. Our industry constantly adapts and evolves its long-standing products to meet our customers’ changing needs.
“But we cannot let our guard down now. We urge the government to widen the AE net to help even more people start saving now for their future.
‘Not enough’ for retirement
“We also know 8% of a proportion of earnings is not enough for most. We need the government to set out clear plans to push up contributions after 2019, and to explore how best to engage all workers with saving and planning for their retirement. Pensions Dashboard services should have a key role here.”
The ABI statement added that it is also important that the UK government ensures all areas of the workforce benefit from AE, in particular part-time employees, people with multiple jobs and the self-employed.