The gap is widening between how much workers pay into public and private sector pensions, according to the latest official statistics.
Private sector workers contributed less into their pensions in the past two years than in previous years across all contribution levels except the zero to 2% banding, a report from the Office of National Statistics revealed.
At this level, private pension contributions rose from 33% of workers to 40%, mainly due to the auto-enrolment pension scheme requiring companies to offer retirement saving to staff.
The number of public sector employees paying 7% or more of their salaries into a pension stayed at 47%, but the number of private sector employees contributing at this level dropped from 11.4% in 2014 to 9.8% in 2015.
Private firms contribute less
The study also disclosed that 55% of private sector employees had a pension in 2015 – up from 49% a year earlier.
This compares with 87% of public sector workers.
Not only is the gap widening between private and public employee pension contributions, but the payments by employers are also vastly different.
Private sector firms are likely to pay an average 66% less than the public sector, says the ONS.
Despite the variance in contribution level by employees and employers, workplace pension membership is at a peak since records started in 1997. Two-thirds of workers are saving for retirement now, compared with 55% in 1997.
Auto-enrolment impact on saving
The rise is explained by the start of auto-enrolment in 2012. Under the scheme, private sector workers will pay at least 8% of their earnings into a pension – with a minimum of at least 3% paid by the employer by April 2019.
Pension experts argue that workers are in denial about how much they need to save to have enough money to fund a comfortable retirement.
Royal London pensions development manager Jamie Clark said: “Workers must try to save more than they are or they will find they will fall short of what they need when they are older.
“They also need to regularly review the amount to make sure new measures and volatile markets do not undermine their efforts or they may have to work longer than they planned to raise enough cash to retire.”
