Total participation in U.K. workplace retirement plans grew 4.8% in 2017 to 41.1 million people, the highest level recorded by the Occupational Pension Schemes Survey published annually by Office for National Statistics.
ONS said Thursday active participation in private-sector defined contribution plans increased the most, up 20% compared to the previous year, reaching 7.7 million in 2017. By comparison, active participants in private-sector defined benefit funds dropped to 1.1 million in 2017, from 1.3 million in 2016.
The total number of active participants in all retirement plans also increased and was at 15.5 million in 2017, up 4.7% compared with the 2016 survey.
An 10.5% increase in active participants in public-sector plans, to 6.3 million from 5.7 million, can be attributed in part to reforms made to the Teachers' Pension Scheme introduced in 2015, according to ONS.
In 2017, for private-sector workplace DC plans, the average total contribution rate fell to 3.4% from 4.2% a year earlier, split between participants at about 1.2% and employers at about 2.1%. By comparison, the average total contribution rate for DB funds was 25.2% of pensionable earnings, split between participants at 6% and employers at 19.2%.
ONS said since the phased introduction of workplace retirement reforms in 2012, the most significant movement can be seen in private-sector defined contribution plans, where membership has risen to 7.7 million in 2017 from 1 million in 2012.
"There has been a stratospheric rise in retirement saving since the introduction of auto enrollment," said Troy Clutterbuck, CEO of the £600 million NOW: Pensions, London, in an emailed comment. "The ONS data shows that active membership of private-sector DC plans has risen from 1 million in 2012 to 7.7 million in 2017. This makes very encouraging reading. But, there is a huge gulf between the fortunes of DB and DC savers, with DB schemes contributing 25% of pensionable earnings vs. private DC plans contributing a paltry 3.4%. To prevent the auto-enrollment generation being bitterly disappointed when they come to retire, minimum contributions need to urgently rise beyond 8%."
Malcolm McLean, senior consultant at Barnett Waddingham added in a separate comment: "The good news is the total membership of occupational plans is now at an all-time high. This is due in no small measure to the impact of auto enrollment and the 9.8 million people who have been introduced to workplace pension saving since 2012."
However, Mr. McLean said "The bad news is that the average amount of money per participant being contributed has reduced quite considerably over the same period. From a high of 9.7% of earnings in 2012, the average has dropped to 3.4% in 2017 — in other words more than halved, which has to be concerning."