Statistics released by the Department for Work and Pensions [DWP] show that public sector workers saved an average of £8,418 per person in 2016, up eight per cent from 2012, when they saved £7,811.
Private sector workers, by contrast, saved an average of £4,098 per person last year, a decrease of 38 per cent from 2012 when the saving was £6,627.
The report suggests this is likely due to the increased number of private sector savers, many of whom have been recently auto-enrolled and are contributing the minimum savings, therefore lowering the average.
When the minimum contribution levels rise in 2018, this picture is expected to change.
Growth in total private and public sector annual savings
Despite the fall in private sector savings, however, both sectors have shown growth in total annual savings, with the public sector increasing its savings by £1.8bn and the private sector by £2bn.
Meanwhile, the annual total amount saved in pensions stands at £87.1bn, an increase of £3.8bn from 2015.
The statistics highlight the positive impact of the workplace pension reforms – particularly the automatic enrolment legislation that commenced in 2012.
Prior to 2012 there had been a general downward trend in participation in workplace pensions, from 62 per cent in 2006 to 58 per cent in 2012.
Since the implementation of automatic enrolment, this figure has risen significantly to 78 per cent – or 16million eligible employees – participating in a workplace pension in 2016.
“Auto enrolment has been a fantastic initiative in getting people starting to save towards a pension,” says Lee Hollingworth, head of DC at Hymans Robertson.
“It is really encouraging to see the sharp increase in participation since its introduction. But there’s a real danger of a missed opportunity to build on what has been started if the government doesn’t act now to engender higher saving rates.
“As a nation we are still massively under-saving for retirement. Auto enrolment has been a commendable start but we need to go further.”
Catherine Stewart, retirement expert at Scottish Widows, comments: “There is no doubt auto-enrolment has been a success in kick-starting the savings habit for millions.
“It’s encouraging to see participation levels continue to increase, but it is not a silver bullet. Auto-enrolment may well be lulling people into a false sense of security that they are saving enough.
“Our latest annual Scottish Widows Retirement Report shows that 44 per cent of Brits are still not saving adequately for retirement.
“This rises to 70 per cent of younger people (those aged 22-29) and our research reveals that less than half of these young people are committed to staying enrolled after minimum personal contributions increase next year. This is something that the government and industry need to act on.
“There are still challenges to address in how we educate and engage people with long-term saving so that they understand what they will need for a comfortable retirement.
“Crucial to this is understanding the different savings groups and their varying needs and helping them in ways that are appropriate.
“Our research shows that a one-size-fits-all approach doesn’t work. People want support that is tailored to their life-stage, personalised, and reflects the way they want to interact.
“At Scottish Widows this is something that we continue to make significant investment in to deliver.”