Only 2.9 million workers crrently pay into a pension scheme, compared to a late-1960s high of 8 million, the ONS says
The number of active members of private sector workplace pension schemes has fallen to its lowest level since records began almost 60 years ago, according to official figures.
There are now 2.9 million UK workers paying into private sector company pension arrangements, compared with 6.2 million in 1995 and more than 8 million in the late 1960s, the Office for National Statistics (ONS) said in its latest annual look at the sector. Even as far back as 1953 the number stood in excess of 3 million.
The data comes just days before what is being billed as the biggest change in pensions for more than a century – the introduction next month of automatic enrolment.
This is a system whereby employers will be required by law to pay into a workplace pension for all their eligible staff. The programme, which is being phased in over five years, aims to get up to 11 million more people saving in a workplace scheme, and pensions minister Steve Webb said the ONS data demonstrated the need for such a shake-up.
The ONS said that since 1991 there had been a decline in active pension membership – defined as someone paying into a scheme or having contributions paid in on their behalf – but this had been “particularly marked” in the private sector, where workers are typically either in a final salary or money purchase scheme.
By contrast, active membership of public sector schemes has gradually risen from 3.1 million in 1953 to about 5.4 million in 2008-11.
Webb said 380,000 workers at the UK’s biggest companies would be automatically enrolled into a pension scheme in October, either into their employer’s existing scheme or one of several new schemes established to enable auto enrolment, including NEST – a scheme created by the government. A further 420,000 will be enrolled in November.
The fall in the number of people paying into private sector workplace schemes has been largely driven by the mass closure of final salary schemes during the past few years, which has seen many existing staff and new joiners losing the much-coveted benefits. Active membership of such schemes has tumbled from 4.6 million in 2000 to 1.9 million in 2011.
However, the ONS survey does not include group personal pensions or stakeholder pensions, which many firms brought in as a replacement for their final salary arrangements, so arguably does not provide the complete picture.
Responding to the finding that private scheme membership was higher in the 1950s than now, Ros Altmann, director general of Saga and a leading pensions commentator, said: “It seems clear workers are valuing pensions less and less. Partly they are complicated, partly there have been lots of scandals, and partly it is the nature of a product that doesn’t fit modern-day life.”
Ann Flynn, head of workplace communications at pensions provider Standard Life, said: “Many people simply aren’t saving for their older age. And even those who are saving often aren’t keeping track of their savings and saving enough.”
She added: “However, the good news is that the latest figures from the ONS show that those who are actively saving into a defined contribution [or money purchase] workplace pension are now saving more than last year, and their employers are investing more on their behalf, too.”
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