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.”