PENSIONS INSIGHT
The annual survey provides summary data on membership of schemes and contributions paid ONS survey of occupational pension schemes
I n September 2016, the Office for National Statistics (ONS) released its annual survey, the statistical bulletin Occupational Pension Schemes Survey , UK: 2015 (http://bit.ly/2dtmxSj). The results provide a detailed view of the nature of occupational pension provision in the UK. The survey collects information from occupational pension schemes (consisting of two or more members) about scheme membership, benefits and contributions. It covers both private and public sector occupational pension schemes registered in the UK. Membership (The membership of a scheme comprises active members, members receiving pensions, and those with preserved pension entitlements.) In 2015, total membership of occupational pension schemes in the UK was 33.5 million, the highest level recorded by the survey, representing an increase of 10% compared with 2014 (30.4 million). These estimates exclude participation in other workplace (group personal) pensions. Active membership of occupational pension schemes was 11.1 million in 2015, split between the private sector (5.5 million) and public sector (5.6 million). Between 2013 and 2014, active membership increased significantly from 8.1 million to 10.2 million, with the estimate at 11.1 million in 2015. The increase, almost entirely in the private sector, is likely to be due to the establishment of automatic enrolment. Estimates for the private sector showed a significant increase from 2.8 million to 5.5 million between 2013 and 2015. According to the Annual Survey of Hours and Earnings Pensions Tables (http://bit. ly/2d02Fdw), membership of occupational schemes accounted for around 70% of workplace pension membership in 2015. Some of the general but steady decrease
1950s and 1960s). Estimates of pensions in payment in both the public and private sectors have risen since 1953, reaching 4.7 million and 5.9 million respectively in 2015. Preserved entitlements The total number of preserved pension entitlements increased from 10.6 million in 2014 to 11.8 million in 2015: ● in the private sector from 6.8 million (2014) to 7.8 million (2015) ● in the public sector from 3.8 million (2014) to 4.0 million (2015). Changes in preserved pension entitlements may be affected by automatic enrolment. For example, if employers close existing schemes and move all their eligible employees to a new scheme based on the automatic enrolment qualifying criteria, these employees will appear in the estimates of both active and preserved members. This may, therefore, have had a bearing on the increase in numbers of preserved pension entitlements. Contributions Although most member (employee) and employer contributions are made as a percentage of salary, excluding bonuses, fixed amount payments can be made as part of the schedule of normal (or regular) contributions. Special cash payments made by employers (e.g. to address a deficit in a DB scheme’s liabilities), are not considered normal contributions and information on such payments is not collected by the survey. Estimates for contribution rates were broadly comparable with 2014. As in previous years, private sector DB schemes had higher contribution rates than DC schemes in 2015. The average total contribution rate for: ● DB schemes, was 21.2% of pensionable earnings, comprising 5.0% for members and 16.2% for employers ● DC schemes, was 4.0% of pensionable
in active membership between 1991 and 2012 can be accounted for by the growth in the number of employees contributing to group personal pensions. Although less than 1% of employees had a group personal pension in 1997, by 2015 this had risen to around 18%.
...likely to be due to the establishment of automatic enrolment
Active membership of private sector: ● defined contribution (DC) schemes, which has remained around 1.0 million since 2008, rose to 3.2 million in 2014 and 3.9 million in 2015 ● defined benefit (DB) schemes has remained at around 1.6 million over the last three years. Active membership of open private sector DB schemes fell to 0.6 million in 2015, from 1.4 million in 2006. The fall in active membership of DB schemes is linked to the rising costs of providing these pensions. A growing number of private sector employers have sought to ‘de-risk’ pension provision by closing DB schemes and replacing them with DC schemes. The rise in DC membership over recent years is likely to be due to the workplace pension reforms. DC arrangements (including group personal pensions), were seen as the most likely route for employers to meet their new obligations under automatic enrolment. Pensions in payment The total number of occupational pensions in payment has risen, from 0.9 million in 1953 to 10.6 million in 2015 (reflecting the increase in active membership in the
| Professional in Payroll, Pensions and Reward | November 2016 | Issue 25 44
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