Leading online pension provider, PensionBee, has found that its customers are paying more into their pensions in 2021 than in the previous year, with the largest monthly contributions coming from the self-employed.
While employed customers’ monthly contributions increased from £374 in the first half of 2020 to £508 in the same period in 2021, self-employed customers’ contributions have risen significantly from £543 in the first half of 2020 to £690 in the same period in 2021.
This is despite the self-employed being among the workers hit hardest by the economic fallout of the pandemic. According to a recent study by the Centre for Economic Performance, 37% of self-employed workers worked ten hours or fewer per week in January 2021, whilst just under half (46%) of self-employed workers report having had trouble paying for basic expenses in the same month (1).
Self-employed savers over the age of 55, who are eligible for drawdown, are withdrawing more of their pension savings, with the average amount increasing by around half (47%), from £9,309 in the first half of 2020 to £13,722 during the same period in 2021. Meanwhile, employed customers aged 55 and above have kept more of their money invested. Withdrawal amounts for this group fell by 8%, decreasing from £10,602 in the first half of 2020 to £9,765 in the same period in 2021.
This latest data follows a similar trend identified by PensionBee in April 2020, which highlighted lockdown periods as having a significant effect on savers’ contribution and withdrawal rates. Those who can afford to make larger contributions to their pensions have saved significantly more, while those over the age of 55 who can afford to delay, have kept more of their pension savings invested. However, without employee benefits to fall back on, such as sick pay or the furlough scheme, self-employed savers appear to be turning to their pension savings to provide some financial support.
PensionBee CEO, Romi Savova, comments: “It’s encouraging to see both employed and self-employed savers prioritising their pensions by increasing their monthly contributions, particularly during recent lockdowns. As always, we would encourage those who have a larger disposable income to continue saving where possible, and for those in retirement to keep as much of their pension invested until the exact moment they need it to ensure they’re well-positioned to enjoy a happy retirement.”
Table 1: Average contributions amounts
Source: PensionBee, July 2021. Based on 39,455 contributions in H1 2020 and 78,549 contributions in H1 2021. ‘Other’ includes savers with alternative occupations such as students and pensioners, as well as those who have not disclosed their employment status.
Table 2: Average withdrawal amounts
Source: PensionBee, July 2021. Based on 1,421 withdrawals in H1 2020, and 1,513 withdrawals in H1 2021. ‘Other’ includes savers with alternative occupations such as students and pensioners, as well as those who have not disclosed their employment status.