Data is not encrypted on the server. The client (typically a web browser) does not encrypt anything before sending it to the Solid server.
So if PODs are hosted “en masse” with a central POD provider, equivalent to Google e-mail hosting, you have not gained much in terms of security by using PODs.
But what you can do with a POD, which is not possible with for instance Facebook, Twitter or the likes, is that you can host your POD on a server under your own control and still be able to use the same applications as if you chose a big shared POD host. This is similar to moving your e-mail off from gmail and onto your own hosted server. The e-mails do not get encrypted by that move, but now you have control of what the content is used for.