Workplace pension participation reached record levels in 2024, with 89 percent of eligible employees now saving, according to new government figures.
However, the rate of new joiners opting out after being auto-enrolled is also rising.
The Department for Work and Pensions’ report, Workplace pension participation and savings trends of eligible employees: 2009 to 2024, shows 21.7 million people are saving into a workplace pension. This is more than double the 10.7 million before auto-enrolment was introduced, while total annual savings reached £149.7 billion last year.
The number of active savers who stop contributing each quarter has remained stable at under 1 percent. However, opt-out rates among new joiners are on the rise, with 8 to 10 percent of newly enrolled employees actively choosing not to participate in 2024.
Clare Stinton, head of workplace saving analysis at Hargreaves Lansdown, said: “The number of employees saving into a workplace pension jumped by 800,000 in 2024 – this is double the increase seen in 2023. The surge is largely due to the fact that people become part of auto-enrolment when they earn £10,000 and this threshold has been frozen since 2014/15.
“This can play a role in helping more people take a step towards a more secure retirement, but £10,000 doesn’t go as far as it did when the threshold was set, so there’s a risk it means more people opt out. Already, the proportion of employees opting out has crept up, with 8-10 percent of those newly enrolled choosing to opt out in 2024.
“It’s understandable, but a big concern. Opting out means walking away from free money from your employer and tax relief – one of the most effective ways to keep more of what you earn long term. However, if you’ve done it because you can’t make ends meet that’s an issue.”
She added that the government’s ongoing review into pension adequacy will need to address long-term contribution levels. Stinton also highlighted a divide between public and private sector savers, noting that public sector workers tend to contribute more and receive greater tax relief. Many private sector employees, she warned, still see auto-enrolment as a complete pension solution “when in reality it’s just the starting point.”
Broadstone head of policy David Brooks said: “While the DWP’s annual publication of workplace pension saving paints a rosy picture with strong and growing participation among eligible employees, there remains cause for concern.
“One in 10 new savers are opting out of their pensions, demonstrating the ongoing battle between longer-term saving and immediate budgetary constraints.
“The findings released alongside the launch of the Pensions Commission show that nearly 15 million people are under-saving for retirement, and nearly half (45 percent) of working-age adults are saving nothing at all into a pension, with lower earners, the self-employed and some ethnic minorities particularly at risk.
“The commission demonstrates the government’s commitment to reversing inadequate saving and serious inequality within the pensions system. ”
Paula Llewellyn, L&G CEO DC and workplace savings, said: “It’s encouraging to see more people opting into their workplace pension, with an increase of 800,000 employees saving in 2024 compared to 2023 despite inflation and the cost-of-living squeeze.
“But saving something isn’t the same as saving enough. Our research shows 22 per cent of retirees live on less than £1,000 a month – around £100 below Pensions UK’s (formerly the PLSA) minimum amount needed to cover essential costs
“Starting early could make all the difference. If the government lowered the auto-enrolment age from 22 to 18, the average person could be 15 per cent better off at retirement. The powers are already there, and countries like Australia and Canada have shown it works. It’s time for action, not just engagement. We need to make it easier for people to start saving earlier and set them on track for a stronger financial future.”
