Employee contributions to private sector defined contribution (DC) pension schemes jumped by 12% to £1.8bn in the three months to September 2020, new data published by the Office for National Statistics (ONS) has revealed.

Figures also showed that employer contributions to DC schemes jumped 7% to £4bn in the third quarter of last year, climbing from £3.7bn in the previous quarter.

Overall, the ONS stated that the market value of pension funds increased by less than 1% from 30 June to 30 September 2020.

The numbers mean that both employee and employer contributions have returned to similar levels seen before the coronavirus pandemic hit.

AJ Bell senior analyst, Tom Selby, said that the figures are “hugely encouraging” after a dip in both employee and employer pension contributions at the start of the pandemic.

“While at this stage we do not have a clear picture of what is happening on the ground, this may in part reflect the fact some employers who furloughed staff have chosen to top-up salaries,” Selby said. “In doing so, employees will also see their automatic enrolment pension contributions boosted.

“It is also possible the UK’s accidental savers have started to put some of the £180bn built up as a result of lower spending during the pandemic towards their retirement.

“As the UK slowly edges out of lockdown, it is vital those who opted out of their workplace pension due to fears over the impact of Coronavirus on their income review their decision based on their current financial situation.

“Anyone not paying into their workplace pension is missing out on both the upfront boost of tax relief and free money via a matched employer contribution.”

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