Workplace pension contributions bounce back after slump
Payments into defined-contribution workplace pension schemes increased in the third quarter of 2020, according to the Office for National Statistics (ONS).
During the first national lockdown last spring, many employees stopped or reduced contributions into their workplace pensions to save money amid fears of being made redundant or losing their jobs.
Data from the ONS showed that employee (-11%) and employer (-5%) contributions were both down in the three months to 30 June 2020, despite employers having to continue paying into employees’ workplace pensions at pre-pandemic levels if using the hugely popular furlough scheme.
In the three months between 1 July and 30 September 2020, employee (+12%) and employer (+7%) workplace pension contributions both bounced back, the ONS said.
The recovery in workplace pension defined-contribution levels correlated with an increasing number of employees coming off of the furlough scheme during Q3 2020.
The ONS said there were 2.8 million employees on furlough by 30 September 2020, compared to 6.8m at the end of June 2020, implying retirement savers had battened down the hatches for the short term.
Helen Morrissey, pension specialist at Royal London, said:
“After seeing a dip in employer and employee pension contributions in the last set of data, it is encouraging to see the figures have bounced back.
“While this will be because less workers were on the furlough scheme, it is heartening to see the uncertainty caused by the pandemic has not caused people to turn their back on [defined contribution] pensions by either stopping or slashing their contributions long term.”
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