Employers contributing £39 billion a year to private sector workplace pensions

by | Nov 30, 2023

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Money jar with pension written on

Analysis from Broadstone of the latest DWP workplace pensions data uncovers the vast contribution to worker’s pensions made by employers and through government tax relief.

Businesses contributed £38.6 billion to worker pensions in 2022, just over a quarter (28%) of the total saved throughout the year. Government tax relief topped up pots by a further £7.4 billion with employees adding £18.3 billion.

Despite the financial benefits, the data showed a dip in total savings for the third consecutive year in the private sector where the majority of workers are likely to be in DC schemes. Annual savings – including employer and employee contributions as well as tax relief – peaked in 2020 at £66.0 billion before slightly edging down in 2021 and falling to £64.4 billion in 2022 in a possible reflection of reduced contributions in the face of the cost-of- living crisis.

 
 

Damon Hopkins, Head of DC Workplace Savings at Broadstone, commented: “The data is another reminder of the significant financial benefits aimed at workplace pension savers with employers and tax relief contributing nearly £50 billion a year to their pots.

“For those who have or are considering opting out of their company pension scheme, it is a reminder that a workplace pension is perhaps the closest to ‘free money’ savers can get. The good news is that fears of mass op-outs do not appear to have materialised, but contribution rates have at best flatlined and, at worst, are now in reverse, certainly in real terms.”

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