Employee pension contributions towards workplace defined contribution (DC) schemes fell by 11% between the first and second quarters of 2020, as the impact of coronavirus struck the UK.

Data from the Office for National Statistics (ONS) revealed that employer contributions were also down by 5% over the same period.

The figures showed that growth in membership of DC workplace schemes slowed in the second quarter of last year, with 23 million members by the end of June 2020, the same number as at the end of March. This compared with 22.4 million at the end of September 2019.

Pension payments and income withdrawal also saw a fall of 4% in the second quarter compared with October to December 2019, but the ONS revealed that lump sum benefits were up 5% over the same period.

AJ Bell senior analyst, Tom Selby, commented: “This drop in contributions likely reflects the impact of furloughing, with total auto-enrolment contributions based on 80% of salary for millions of people. Some workers will also inevitably have opted out due to pressure on their incomes caused by the pandemic.

“Given total workplace pension membership had been increasing steadily up until March, it seems likely the figure recorded in Q2 2020 of 23 million is lower than it might have otherwise been. Membership of defined benefit (DB) schemes was also broadly stable during the period.

“With the vaccine programme boosting hopes of an economic recovery in the second half of 2021 and beyond, those who have hopped off the retirement saving horse should get back on as soon as they can.

“In doing so, they will benefit not only from a matched contribution from their employer but the added bonus of pension tax relief.”

interactive investor head of pensions and savings, Becky O’Connor, added: “These figures show us that unless economic fortunes reverse soon, the impact of the pandemic may not just be felt in the immediate term but also in decades to come, when today’s younger workers retire with potentially less than they need, because they were unable to contribute enough to a pension during their working lives.

“Even without the pandemic, the risk of retiring without enough to last is real for workers in today’s defined contribution schemes if they are only paying in the minimum amount.”

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