15-year low for membership of workplace pension schemes

WORKPLACE pension scheme membership slipped to a 15-year low in the UK during 2012, official figures show.

Just 46% of employees belonged to a workplace pension, markingthelowest level recorded since similar data was first collated in 1997, according to Office for National Statistics (ONS) figures.

Pensions experts said 2012’s trough should be reversed in the coming years amid Government efforts to get more people saving for their old age.

The ONS said the fall had been driven by a declining membership of defined benefit (DB) schemes, such as final salary schemes, which promise people guaranteed incomes when they retire regardless of how well underlying investments have performed.

Employers have increasingly said that such schemes are too expensive for them to keep open for new members and they have replaced them with defined contribution (DC) schemes, where the worker shoulders more of the risk and their pension depends on how well their investments have done.

The ONS’s Annual Survey of Hours and Earnings found a “significant difference” between the private and public sectors.

More than eight out of 10 (83%) public-sector workers were members of a workplace pension scheme last year, compared with less than a third (32%) of private-sector employees. Many public-sector pensions are still DB schemes, dubbed “gold-plated” as they offer certainties many in the private sector cannot match.

Membership of workplace pensions started to dip below 50% in 2010 and, stood at about 47% in 2011.

The ONS findings were collected just before the introduction of the Government’s automatic enrolment scheme, which will eventually see about 10 million people automatically placed into workplace pensions.

The reforms began last autumn with larger firms, and efforts are also being made to make pension schemes more transparent and attractive to savers.