More workers are opting out of their workplace pensions as household budgets continue to face cost-of-living pressures. New figures from the Department for Work and Pensions (DWP) show the proportion of people who had newly started saving into a workplace pension and then actively opted out rose to around 11 to 12 per cent over the last year.
Opt-out levels more volatile
The DWP said opt-out levels have been more volatile in recent years, potentially driven by the Covid-19 pandemic and periods of higher cost of living. It comes despite workplace pension participation remaining high, with around nine in 10 eligible employees in Great Britain saving for retirement in 2025.
Some 22.6 million eligible employees were saving into a workplace pension last year, an increase of 600,000 compared with 2024. The participation rate also increased by one percentage point to 90 per cent. Across all employees, including those who do not meet the age and earnings requirements for automatic enrolment, 82 per cent were saving into a workplace pension in 2025 - equivalent to 24.2 million people.
Eligibility and trends
The DWP said the number of employees saving continues to increase year-on-year, partly because more workers have become eligible for automatic enrolment as the £10,000 earnings trigger has remained frozen. Automatic enrolment generally applies to workers aged between 22 and State Pension age who earn more than £10,000 a year.
However, the latest figures suggest a small but growing proportion of people who begin saving are subsequently deciding to opt out. The DWP said the number of active savers who stop saving each quarter has remained broadly stable over several years, but its latest data shows small upward trends in both stopping saving and opt-out rates.
Expert reaction and savings total
David Pye, Director at financial services consultancy Broadstone, said the increase was worth monitoring closely. He said: “Although the rise remains relatively modest, it may indicate that continued pressures on household budgets through cost-of-living challenges are forcing more employees to prioritise their immediate financial needs over future ones.”
The latest figures also show £166.1 billion was saved into workplace pensions by eligible employees during 2025. This represents a £63.5 billion increase in real terms compared with 2012, when measured in 2025 earnings terms. Employers accounted for the majority of the money going into workplace pensions last year. Employer contributions made up 61 per cent of total savings, while employees contributed 27 per cent and Income Tax relief on employee contributions accounted for the remaining 12 per cent.
Mr Pye said the continued increase in workplace pension participation demonstrated the lasting impact of automatic enrolment, but warned that participation alone does not guarantee workers will have enough money for retirement. He added: “Pension accumulation is now firmly established as a normal part of working life, however participation alone does not guarantee an adequate retirement income. While total annual saving has increased substantially since 2012, minimum automatic enrollment contribution levels remain unlikely to provide many employees with the standard of living they expect in retirement, particularly where people begin saving later or experience prolonged gaps in contributions.”
