Eligible private sector workers contributed a record-breaking £25.5 billion to workplace pensions in 2024, according to analysis from consultancy Broadstone.
The figure, based on figures from the Department for Work and Pensions, shows a renewed uptick in employee saving after a period of stagnation during the pandemic and cost of living crisis.
The total represents a modest rise from the previous high of £25.3 billion in 2019. Broadstone said the growth is a result of a rise in the number of eligible employees enrolled in defined contribution (DC) schemes, as well as improved data that includes more higher earners.
Alongside employee contributions, workers also benefited from an all-time high £10.8 billion in pension tax relief in 2024. This historic figure is expected to draw attention ahead of the Autumn Budget, when the chancellor may consider tax reforms.
Employer contributions for the year totalled £46.4 billion, bringing the total value of pension savings by eligible private sector employees to £82.8 billion. This is a substantial amount, but it falls slightly short of 2019’s record high of £83.6 billion, largely due to reduced employer payments.
However, despite the rise in combined employer and employee contributions, there is concern over stagnant median saving levels. The typical pension contribution per employee remained relatively flat at £3,230 a year, a fall from £3,390 in 2019. Employer contributions have shown little movement over the last four years, the consultants said.
Richard Sweetman, senior DC consultant at Broadstone, said that the figures offer both encouragement and cause for concern. “While it is great that the aggregate value of employee contributions has risen to record levels, this is primarily driven by rising numbers of workplace pension savers.
“It is alarming that median contributions have not really moved much of late in a trend that is unlikely to escape the gaze of the newly-formed Pensions Commission which is charged with improving pension adequacy in the UK.”
He added: “Small, incremental increases in contributions can have a big impact over a working life, particularly when combined with strong investment performance and low fees. Savers should review their pension regularly to ensure their money is working hard, and consider how their total retirement income, including the State Pension, measures up against the lifestyle they want. From there, they can adjust their contributions to help close any gap.”
