Occupational scheme membership rises three points over 2018, finds ONS

James Phillips reports...

Nearly four in five UK employees are now members of an occupational pension scheme, Office for National Statistics (ONS) data reveals.

An additional 3% of the population signed up to workplace schemes over the course of 2018 as the staging of auto-enrolment (AE) concluded, the statistics found, based on a reference date of the week containing 18 April 2018.

The Employee workplace pensions in the UK dataset revealed the private sector had seen a five percentage point increase in scheme membership, up to 72%, compared to a one point increase to 90% for the public sector.

Within the age grouping eligible for AE – those aged between 22 and state pension age – 80% of employees were members of an occupational scheme. Just 18.2% of those aged between 16 and 21 were members of a workplace scheme, while this was 34.5% for those over state pension age.

Of those employees with pensions, defined benefit (DB) schemes continued to lead in terms of the proportion of employees with that provision, with 36.4% of all members, although there was a huge gap between public and private sector membership. Nearly all (93.1%) public sector scheme members had DB provision, compared to just 11.7% of private sector members.

Conversely, occupational defined contribution (DC) and group personal pension (GPP) membership was higher among private sector employees, at 47.8% and 30.4% respectively compared to just 4% and 1.6% in the public sector.

Female members of staff were more likely to be members of occupational pension schemes, both in full- and part-time positions, at 86.4% and 59.2% respectively, while membership generally grew in accordance with wages and employer size.

The largest proportion of DC members (38.3%) paid contributions of between 2% and under 3%, and 35.7% received employer contributions of between 0% and under 2%. Meanwhile, 45.5% of DB members paid contributions of over 7%, and 32.9% received employer contributions of between 15% and under 20%.

 

Pensions and financial inclusion minister Guy Opperman welcomed the figures: “AE has been an extraordinary success. These ONS figures show that the saving habit is sticking. More people than ever are saving and saving more, transforming their retirement and improving their lives.”

Equiniti propositions and solutions director Chris Connelly agreed that the figures showed the power of the “revolutionary” AE programme.

“Perhaps the most transformational element of the reforms are that people are now being funnelled into pension saving at a far younger age,” he continued. “Once again it was the youngest who saw the biggest rise in participation with a six percentage point increase in scheme membership for 22-29 year olds – in total, 79% now have a workplace pension.”

He said the rise in minimum contributions – from 5% to 8% on 6 April this year – and the introduction of a dashboard should help savers see the value of saving for the long term.

But there is a “cautionary note” in that the lowest-paid are often missing out on benefits from pensions tax relief, and the figures do not include the self-employed, he said.