This is largely due to the increasing number of people being automatically enrolled into a scheme, with recent analysis by the Institute for Fiscal Studies showing a 95% rise in private sector enrolment between 2012 and 2015.
To date there have been 6.9 million people automatically enrolled as part of the policy launched in 2012, which is due to be fully rolled out by 2018, with over 293,000 employers completing their automatic enrolment duty.
Minister for Pensions, Richard Harrington, said: “Automatic enrolment is helping millions of working people save for their retirement, so they can look forward to extra income on top of their state pension and a better standard of living as a result.
“It is clear automatic enrolment is playing a key role in shaping the retirement landscape for generations to come.
“However I want to build on this success and will be looking at how we can get even more people saving, and saving more.”
The annual total amount saved in 2015 by employees was £81.8bn, an increase of £1.4bn from 2014 and a further £7.1bn since 2012.
This is set to increase as minimum contributions rates rise to 5% in April 2018 and then to 8% in April 2019, with an estimated £17bn of extra workplace pension saving per year expected as a result of automatic enrolment by 2019/20.
However as businesses adjust to new rules, the number of compliance notices issued by the Pensions Regulator increased fivefold in the three months to September, with the number of penalty notices increasing by 15 times, compared to the previous quarter.
Aegon head of pensions, Kate Smith, said: “Ignoring the law and being on the wrong end of escalating fines could cause serious financial damage to small businesses as they range from £50 to £10,000 per day, depending on the size of the employer.
“Planning ahead, with the help of an adviser, will keep small businesses on the right side of the law and importantly also show they are doing the right thing for their employees’ retirement.”