Retirement savers are staying away from private pensions as the number investing has slumped to the lowest level since 1953.
Detailed data from the Office of National Statistics (ONS) shows that workers contributing to private and public sector pensions is dropping.
In 2011, 8.2 million workers were saving with a pension, compared to the peak of 12.7 million in 1967.
Of those saving with a pension, 2.9 million have a private pension, while 5.3 million are in the public sector.
The government hopes the number of private pension savers will start to rise with the introduction of auto-enrolment in October 2012.
Savers losing £200 tax relief a year
Not only are less workers saving with private pensions, they are also putting less aside than their public sector counterparts.
In the private sector, the average saving rates are 4.9% for workers and 14.2% for employers for defined benefit schemes and 2.8% for employees and 6.6% for employers in defined contribution schemes.
Although total pension scheme membership has increased since 1983, from 18.9 million to 27.2 million, more than 9 million workers (31%) have never joined a company pension scheme, according to The Prudential.
The insurer also claims this lack of retirement saving is leading workers to miss out on an average £200 pension contribution relief each, adding up to £1.8 million every year.
The pension firm’s research showed only one in five workers join a join a company pension scheme – 23% of men, compared with 17% of women.
Money concerns affect pension saving
Those living in Scotland are most likely to contribute to a workplace scheme, with nearly a quarter of workers (23%) claiming to do so.
Concerns over the cost of living and personal finances are stopping many savers from locking up their cash for the long term in a pension.
More than a quarter (26%) confirm they pay less in to a pension or have stopped contributions to maintain their disposable incomes.
Around a fifth (19%) explained stock market volatility that can wipe value off their retirement savings overnight is stopping them investing in a pension, while only 6% are spurred in to saving with a pension because they fear they will not have enough cash when they stop working.
Stan Russell, retirement expert at Prudential, said: “The benefits that company pension schemes offer are unrivalled. Not only do savers receive tax relief, but this is also topped-up with employer contributions which, when combined, often more than double the contributions of the employee.”
