Financial and insurance organisations contribute most to employees’ pensions


Financial and insurance organisations are the employers that contribute the most into employees’ pension pots, paying an average of 9.5% of an individual’s salary into their retirement savings, according to research by Profile Pensions.

Its analysis of employees over the age of 22 but under the state pension age, who earn at least £10,000 a year and are employed in the UK, further found that those employed in the financial and insurance sector received an annual salary of £30,403.

Teaching was also among the professions found to receive more generous pension contributions, with average employer contributions reaching 9.3%, based on an average staff salary of £22,146; total employer pension contributions for someone on this salary could amount to £2,053.60 annually. Female employees in the education sector are more likely to receive a 9.3% pension contribution from their employer, versus a 7.9% employer contribution for male staff.

Organisations within the electricity, gas, steam and air conditioning supply industries typically contribute 7.1%. Based on an average annual salary of £23,943, this adds up to £1,703 a year in employer pension payments.

Men working in this sector are more likely to receive a higher pension contribution, gaining 7.4% compared to 4.2% for women.

Across all sectors, the employer pension contribution rate is higher for men (4.6%) than women (4.4%). Within the manufacturing industry, men typically receive a 5.3% employer pension contribution, versus a 4.4% contribution for female staff.

The industries that deliver the lowest employer pension contributions include agriculture, forestry and fishing (2%), food services (2.1%) and the arts (2.5%). These statistics were taken prior to the April 2019 minimum contribution increase, which requires organisations to pay at least 3% of an employee’s salary into their pension pot.

Michelle Gribbin, chief investment officer at Profile Pension, said: “The difference between industries is remarkable. While some [we] might expect, like financial and insurance industries, the high pensions in education mean teachers are likely to be better off in retirement than those in typically high-earning careers, like real estate or logistics.

“As for the gender differences uncovered, this is just another example of the gap between genders in the workplace, this time played out through pension contributions.

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“Generally, we know women are more likely to have lower incomes and more interrupted careers as a result of their caring responsibilities. Ensuring this doesn’t penalise them is as much of an organisational culture issue as it is a government policy issue.

“Firms should really start to get to grips with the fundamentals and fully adopt a policy of ‘equal pay and pension contributions for equal roles’, applied to both full-time and part-time [employees]. As a further step, firms regularly reporting on gender disparities in income and pension contributions really helps ensure good transparency and commitment on this issue.”