HMRC has recently released information gathered by the National Statistics office on Personal and Stakeholder pensions.
The report provides information and analysis on personal pension contributions, the cost of tax relief of registered pensions schemes, Annual Allowance Charges, Lifetime Allowance charges and flexible payments from pensions. The latest report was published on 30 September 2021.
Unfortunately, last year’s report, which was due to be published in September 2020 had to be cancelled, as HMRC identified that some of the information from pension providers was missing. HMRC launched an investigation which resulted in new data from pension providers being submitted for 2016-17 onwards.
The total value of personal pension contributions has risen by an average 11 per cent over the last three year to £31.3 billion. Although the number of members contributing to a personal pension has remained at 9.4 million since 2018-2019. However, the number of people contributing to a personal pension has increased by 1 million members since the introduction of automatic enrolment in 2012.
The annual average pension contribution per member has increased by 10 per cent from £3,000 in 2018 to 2019 to £3,300 in 2019 to 2020. This is an increase of £600 on the average annual contribution of £2,700 in 2017 to 2018.
The following chart shows the personal pension contributions by source has been taken from the official report on the Gov.uk website. There is a link below to view the full commentary.
Chart 1 shows that the amount which was contributed to personal pensions during 2019/20 has increased by 12% on the previous year.
Rise in Employer Contributions
The proportion of pension payments that have been contributed by employers has risen significantly since 1990 to 1991 from around 10% to 65% in 2019 to 2020. The rise in employer contributions has been attributed to the introduction of auto enrolment which was introduced in 2012.
In 2015, the rules on pensions changed and allowed members to make flexible withdrawals from their pension fund. Since this change was introduced, the amount of pension that has been flexibly withdrawn has been over £45 billion.
During 2020 to 2021 over £9.5 billion was withdrawn from pensions flexibly. But this represents a 2 per cent decrease year-on-year on the previous year and a 3 per cent decrease on the number of individuals flexibly withdrawing their pensions. It is thought that the decrease in numbers may be as a direct impact of the Covid-19 pandemic.
To view the full report go here: