This is partly attributable to auto-enrolment but is also perhaps evidence that people are willing to make provision for their future by investing in long term savings schemes.
HMRC’s new 2015/16 estimates show that personal pension contributions have finally passed the peak they achieved back in 2007/08 just as the global financial crisis was breaking.
2015/16 saw a record £24.3bn contributed to PPs, up from £20.3bn in 2014/15 and the peak of £20.9bn contributed in 2007/08.
The data also shows that the proportion of these contributions made by employers has continued to rise, and is now 59%.
Contributions from the self-employed increased for the first time since 2011/12 to £1.7bn, but are still less than half their 2007/08 peak of £3.5bn.
The number of individuals contributing to personal pensions also reached a record level of almost 9 million in 2015/16.
Average contribution levels also rose from 2014/15 (in both nominal and real terms) but are still well below the 2011/12 peak.
Tom McPhail, Head of policy at Hargreaves Lansdown, said: “It has taken nearly a decade for private pension saving to recover from the global financial crisis. The good news now is that both membership numbers and the amounts invested are on the rise. This is partly attributable to auto-enrolment but is also perhaps evidence that people are willing to make provision for their future by investing in long term savings schemes. The next challenge is to find ways to harness technology and find ways to make it easy for the self-employed to save for their later life too.”
Chris Knight, Managing Director of Legal & General Retail Retirement, commented: “An increase in pension contributions is certainly to be welcomed, but not altogether surprising. After five years of the auto-enrolment project, millions of workers in the UK have been brought into pensions schemes and have started saving towards retirement.
“However, whilst auto-enrolment has undoubtedly increased engagement in pensions, there is the risk that people might think they are putting enough aside for retirement, when in fact they are only contributing the bare minimum.
“Auto-enrolment is an opportunity we will waste if we don’t encourage individuals to save more than the current figures show, and if we don’t provide clearer pathways to the various options for retirement income. Brokers, providers and other key stakeholders must consider communicating earlier with individuals about retirement planning and raise awareness about the different options for later life income, whether that be annuities, drawdown or even property wealth.”