Millions still missing out on the benefit of pension tax breaks
– The good news is that participation rates in workplace pensions are finally on the way back up again after around 45 years of continual decline.
– The gender gap has diminished significantly, from 20 percentage points in 1996/97 to just 3 percentage points in 2012/13.
– The bad news is that many employees are still missing out and self-employed pension participation rates have collapsed, down from 58% of self-employed men in 1998/99 to just 22% in 2012/13.
– The gap between public and private sector membership persists too, with public sector scheme participation rates at 87.6% (men) and 83.8% (women), compared to 39.7% (men) and 30.5% (women) in the private sector.
In 2012/13, 33% of the labour force were participating in a private pension arrangement; 13.4 million out of 40.5 million.
Tom McPhail, head of pensions research said: “Millions of workers are still missing out on benefits of building a private pension nest-egg to provide them with an income in retirement. Auto-enrolment is starting to reverse the downward trend of recent decades but there is still much more to be done. The gap between public and private sector pension provision is still huge and millions of self-employed are missing out on pension tax breaks. With the exciting new freedoms being introduced in such a hurry next year, we would like to see the next government stop and take stock in 2015 and to bring forwards the scheduled review of auto-enrolment to 2015. We need to think in terms of auto-enrolment 2.0.”
