London Daily

Focus on the big picture.
Saturday, Feb 22, 2025

More people leaving workplace pension schemes, TUC warns

More people leaving workplace pension schemes, TUC warns

Growing numbers cannot afford to save for retirement, prompting calls to increase employer contributions
Growing numbers of workers are cutting their workplace pension contributions or opting out of schemes entirely because they cannot afford payments – prompting calls for employers to increase the amounts they pay in.

With real wages falling and bills rising sharply, people across the country are looking for ways to reduce spending and supplement their incomes, and the TUC said it was hearing about staff in both the public and private sectors who had concluded they could not afford to save for retirement at the moment.

“Based on what our unions are telling us, anecdotally they are saying quite a lot of people are having to leave schemes,” a spokesperson for the trade union said. “That is public sector and private sector … It’s something we’re hearing quite a lot from the public sector unions.”

Its warnings follow data released in August indicating that the number of people choosing to opt out of their company pension scheme increased by almost a third between March and July this year.

The figures were issued by Penfold, a digital pensions platform used by private savers, the self-employed, company directors and businesses.

About 10% of people quit their workplace scheme, and the TUC said Penfold’s findings – which would translate into a two to three percentage-point increase in opt-out rates, lifting them to about 12%-13% – appeared broadly consistent with what it was hearing.

The reports have already led to calls for the government and the pensions industry to work together to come up with a solution to avoid people being left short at retirement.

Investment advisers say workers thinking of quitting their scheme need to think very carefully before jumping ship. Someone who opts out is essentially giving up the pension contributions from their employer, which effectively amounts to “a voluntary pay cut”, said Tom Selby, head of retirement policy at investment firm AJ Bell. “Furthermore, you will miss out on the upfront boost provided by pension tax relief,” he added.

Tisa (the Investing and Saving Alliance), a membership organisation for UK financial firms, said: “In times like these, reducing or opting out of pension contributions is unsurprising, and it is easy and understandable to forget about the long term.”

Renny Biggins, head of retirement at Tisa, said possible solutions it was proposing included increasing the amount that employers had to pay in under the UK’s auto-enrolment workplace pension regime from 3% of earnings to 6%, in order to allow staff to cut their contributions and release some money to supplement their disposable income.

Alternatively, employers could opt to continue paying pension contributions while allowing their workers to take a temporary contribution holiday.

“We recognise there are immediate needs for people to provide for their families, but we are nonetheless concerned that if people decide to reduce or opt out of their pension now, there will be consequences in the future,” said Biggins.

Jack Jones, pensions policy officer at the TUC, said: “Our longer-term policy target is for increased employer contributions.”

National Employment Savings Trust (Nest), a publicly owned pension scheme set up by the government which now has 11.2 million members, said the opt-out rate for newly enrolled workers had largely remained stable throughout the pandemic and was currently at 10.2%.

Nest said it had seen a very small increase in the number of members becoming inactive, which included people who had chosen to stop paying in, but that it could not say if this was due to increases in the cost of living.
Newsletter

Related Articles

0:00
0:00
Close
Good News: Senate Confirms Kash Patel as FBI Director
Officials from the U.S. and Hungary Engage in Talks on Economic Collaboration and Sanctions Strategy
James Bond Franchise Transitions to Amazon MGM Studios
Technology Giants Ramp Up Lobbying Initiatives Against Strict EU Regulations
Alibaba Exceeds Quarterly Projections Fueled by Growth in Cloud and AI
Tequila Sector Faces Surplus Crisis as Agave Prices Dive Sharply
Residents of Flintshire Mobile Home Park Grapple with Maintenance Issues and Uncertain Future
Ronan Keating Criticizes Irish Justice System Following Fatal Crash Involving His Brother
Gordon Ramsay's Lucky Cat Restaurant Faces Unprecedented Theft
Israeli Family Mourns Loss of Peace Advocate Oded Lifschitz as Body Returned from Gaza
Former UK Defense Chief Calls for Enhanced European Support for Ukraine
Pope Francis Admitted to Hospital in Rome Amid Rising Succession Speculation
Senate Republican Leader Mitch McConnell, at the age of 83, Declares His Retirement.
Whistleblower Reveals Whitehall’s Focus on Kabul Animal Airlift Amid Crisis
Politicians Who Deliberately Lie Could Face Removal from Office in Wales
Scottish Labour Faces Challenges Ahead of 2026 Holyrood Elections
Leftwing Activists Less Likely to Work with Political Rivals, Study Finds
Boris Johnson to Host 'An Evening with Boris Johnson' at Edinburgh's Usher Hall
Planned Change in British Citizenship Rules Faces First Legal Challenge
Northumberland Postal Worker Sentenced for Sexual Assaults During Deliveries
British Journalist Missing in Brazil for 11 Days
Tesco Fixes Website Glitch That Disrupted Online Grocery Orders
Amnesty International Critiques UK's Predictive Policing Practices
Burglar Jailed After Falling into Home-Made Trap in Blyth
Sellafield Nuclear Site Exits Special Measures for Physical Security Amid Ongoing Cybersecurity Concerns
Avian Influenza Impact on Seals in Norfolk: Four Deaths Confirmed
First Arrest Under Scotland's Abortion Clinic Buffer Zone Law Amidst International Controversy
Meghan Markle Rebrands Lifestyle Venture as 'As Ever' Ahead of Netflix Series Launch
Inter-Island Ferry Services Between Guernsey and Jersey Set to Expand
Significant Proportion of Cancer Patients in England and Wales Not Receiving Recommended Treatments
Final Consultation Launched for Vyrnwy Frankton Power Line Project
Drug Misuse Deaths in Scotland Rise by 12% in 2023
Failed £100 Million Cocaine Smuggling Operation in the Scottish Highlands
Central Cee Equals MOBO Awards Record; Bashy and Ayra Starr Among Top Honorees
EastEnders: Four Decades of Challenging Social Norms
Jonathan Bailey Channels 'Succession' in Bold Richard II Performance
Northern Ireland's First Astronaut Engages in Rigorous Spacewalk Training
Former Postman Sentenced for Series of Sexual Offences in Northumberland
Record Surge in Anti-Muslim Hate Crimes Across the UK in 2024
Omagh Bombing Inquiry Concludes Commemorative Hearings with Survivor Testimonies
UK Government Introduces 'Ronan's Law' to Combat Online Knife Sales to Minors
Metal Detectorists Unearth 15th-Century Coin Hoard in Scottish Borders
Woman Charged in 1978 Death of Five-Year-Old Girl in South London
Expanding Sinkhole in Godstone, Surrey, Forces Evacuations and Road Closures
Bangor University Announces Plans to Cut 200 Jobs Amid £15 Million Savings Target
British Journalist Charlotte Peet Reported Missing in Brazil
UK Inflation Rises to 3% in January Amid Higher Food Prices and School Fees
Starmer Defends Zelensky Amidst Trump's 'Dictator' Allegation
Zelensky Calls on World Leaders to Back Peace Efforts in Light of Strains with Trump
UK Prime minister, Mr. Keir Starmer, has stated that any peace agreement aimed at ending the conflict in Ukraine "MUST" include a US security guarantee to deter Russian aggression
×