Total membership of occupational pension schemes in the UK was 33.5 million in 2015, 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 (5.5 million) and public sector (5.6 million).
For private sector defined contribution schemes, the average total (member plus employer) contribution rate was 4.0% in 2015, broadly comparable with 2014.
Membership and contribution rates are likely to have been influenced by the recent workplace pension reforms (see Overview).Nôl i'r tabl cynnwys
The Occupational Pension Schemes Survey (OPSS) is an annual survey of occupational pension schemes in the UK, run by the Office for National Statistics (ONS). The survey was first undertaken in 1953, then in 1956 and 1963, and then every 4 to 5 years until 2004 when it became an annual survey. Until its transfer to ONS in 2006, OPSS was run by the Government Actuary’s Department (GAD).
The OPSS was among the business surveys included in our 2015 public consultation on changes to ONS products. Feedback from respondents reaffirmed the value of this survey, particularly in providing pension membership and contribution rate data for analysis and in monitoring the impact of policy changes such as automatic enrolment upon occupational pension schemes. This resulted in a decision to retain the OPSS survey for the present time.
The OPSS collects information from occupational pension schemes (consisting of 2 or more members), about scheme membership, benefits and contributions. It includes sections on very small schemes (schemes with 2 to 11 members) and those that are winding up. OPSS covers both private and public sector occupational pension schemes registered in the UK. Results from OPSS provide a detailed view of the nature of occupational pension provision in the UK.
OPSS does not cover state pensions or personal pensions, the latter being based on individuals entering into a contract with a pension provider. This exclusion extends to group personal pension (GPP) arrangements, such as stakeholder and self-invested personal pensions, where the contract is facilitated by the employer(s). Following feedback from stakeholders, we have started an experimental data collection from GPP providers. Estimates from this are not yet of an appropriate quality to form part of this National Statistics release.
This bulletin provides summary data on membership of schemes and contributions paid. Further information is available in the associated OPSS datasets or on request. To assist your understanding of these data, pension definitions are included as part of the background notes of this release with further detail in this Pension Trends glossary.
We are always seeking to refine the OPSS questionnaires to improve the estimates and capture data that reflects the changing pensions landscape. Some of the time series presented are, therefore, not directly comparable over time. If this is the case, caveats are included in the footnotes associated with the relevant chart or table.Nôl i'r tabl cynnwys
This bulletin draws attention to differences in estimates for main variables between 2015 and preceding years. It is likely that these changes are a result of the workplace pension reforms introduced by the Department for Work and Pensions (DWP).
Starting in October 2012, with gradual roll-out by 2018, all employers have a duty to automatically enrol eligible employees into a qualifying pension scheme and to make contributions on their behalf. Automatic enrolment is being introduced in stages, based on the size of the employers’ PAYE scheme (as of 1 April 2012). Minimum contribution levels have also been introduced, in a phased process, with full implementation by 2019. For further information please see Background note 2.
It should be noted that the reforms are not taking place in isolation and other social and economic factors (for example, employment, disposable household income levels, attitudes to saving for retirement) would also affect membership and contribution rates.
DWP has published an automatic enrolment evaluation report on the reforms which references various sources.Nôl i'r tabl cynnwys
We are constantly aiming to improve this release and its associated commentary. We would welcome any feedback you might have; please contact us via email: firstname.lastname@example.org or telephone Hazel Clarke on +44 (0)1633 455633.Nôl i'r tabl cynnwys
Total membership of occupational pension schemes consists of:
active members (current employees who would normally contribute)
pensioner members (those receiving pension payments)
members with preserved pension entitlements (members who are no longer actively contributing into the scheme but have accrued rights that will come into payment at some point in the future)
Please note that individuals may have more than one of these types of membership. For example, an individual may be in receipt of a pension from a former employer but still working and contributing to a pension. This person would appear in both the pensioner and active member categories. Similarly, an individual might be working and contributing to a scheme while being entitled to a preserved pension from a previous employer’s scheme. This person would appear in both the active and preserved member categories. As such, the estimates of membership are not counts of individuals.
Overall estimated membership in 2015 was 33.5 million (Figure 1), split between:
11.1 million active (employee) members
10.6 million pensions in payment
11.8 million preserved pension entitlements
The increases shown in each of the membership types over the last few years are discussed in the relevant following sections.
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The active members of an occupational pension scheme are those who are contributing to the scheme, or having contributions made on their behalf. They are usually current employees of the sponsoring employer. This release includes breakdowns of active membership by sector (public or private), benefit structure (defined benefit or defined contribution) and status (for example, open or closed). Definitions, for example, for public sector, are given in the background notes – see Section 3.
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 (Figure 2). The increase, almost entirely in the private sector, is likely to be due to the establishment of automatic enrolment explained in the “Workplace pension reforms” section. Estimates for the private sector showed a significant increase from 2.8 million to 5.5 million between 2013 and 2015.
Workplace pensions consist of occupational and group personal pensions (see Background note 3). According to the Annual Survey of Hours and Earnings (ASHE) pensions release, membership of occupational schemes accounted for around 70% of workplace pension membership in 2015.
Between 1991 and 2012, there was a slow but generally steady decrease in active membership. Some of this can be accounted for by the growth in the number of employees contributing to group personal pensions. The ASHE release estimates that less than 1% of employees had a group personal pension in 1997. By 2015, this had risen to around 18%.Nôl i'r tabl cynnwys
Active membership of private sector defined contribution (DC) schemes, which has remained around 1.0 million since 2008 (Figure 3), rose to 3.2 million in 2014 and 3.9 million in 2015 – caused by the rise in membership of open schemes (those which admitted new members – see Figure 4).
Active membership of private sector defined benefit (DB) schemes remained at around 1.6 million over the last 3 years (Figure 3). The fall in active membership of DB schemes (also shown in the datasets) is linked to the rising costs of providing these pensions. Partly due to DB schemes’ approach to dealing with risk and partly due to increased life expectancy, a growing number of private sector employers have sought to “de-risk” pension provision by closing DB schemes and replacing them with DC schemes. Active membership of open private sector DB schemes fell to 0.6 million in 2015, from 1.4 million in 2006.
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. This is because, in DB schemes, the employer bears the investment risk and must pay out pensions at an agreed rate, regardless of the returns made on the invested contributions. In contrast, for DC schemes, members bear the risks as there is no promised level of pension payment. DB schemes are, therefore, potentially less attractive to employers than providing a DC occupational or group personal pension.
While employers could use DB schemes for automatic enrolment, the minimum requirements for a qualifying scheme focused on DC provision. If employers elected to meet their obligations through provision of a DB (rather than a DC) scheme, their “staging date” (the date by which time they needed to be compliant with the new legislation) could be delayed.
One reason why DC membership was expected to rise was that the National Employment Savings Trust (NEST) was set up as a DC scheme. NEST is a qualifying pension scheme, established under the Pensions Act 2008, to support the introduction of automatic enrolment (AE). Since AE began, various master trust arrangements have also become important players in the pensions market – again with provision typically on a DC basis. Master trusts involve a single provider managing a pension scheme for multiple employers under a single trust arrangement.
Some schemes have more than one section; offering benefits on a different basis to different groups of members (see Background note 3). In the private sector, only 36% of DB members were in sections of schemes that were open to new members compared with 97% of DC members (Figure 4).
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Pensioner members are those who are in receipt of pension payments. This section estimates the number of pensions in payment from UK occupational pension schemes in 2015. It includes pensions in payment to dependants, pension credit members (see Background note 3) and those who are still working for the same employer (for example, where they are partially retired).
These estimates do not represent the total number of pensioners in the UK receiving benefits from occupational pension schemes because an individual pensioner may be in receipt of more than one pension. The estimates do not include annuities (or other retirement products), purchased by members of DC occupational pension schemes upon retirement.
While it is not a direct comparison (for reasons mentioned previously and, for example, that people move between sectors, change employers), the increase in active membership in the 1950s and 1960s (Table 2 in the datasets) should be broadly reflected in the current pensions in payment figures (Figure 5), as that cohort of employees reaches retirement age. While changes to methodology mean that comparisons over time should be treated with caution, the total number of occupational pensions in payment has risen, from 0.9 million in 1953 to 10.6 million in 2015. 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.
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When active employee members leave the employment of the scheme’s sponsoring employer, they usually have a choice of what to do with the benefits accrued in the scheme. The default position for members is generally1 a preserved pension entitlement, where the rights remain in the scheme and a pension comes into payment at normal pension age. These estimates do not represent the number of individuals with preserved pension entitlements but show the number of preserved pensions. The estimates also include dependants and pension credit members (see Background note 3) who have a preserved pension entitlement and those still working for the employer (this may occur when an employer stops provision or changes to a different type).
The total number of preserved pension entitlements increased from 10.6 million in 2014 to 11.8 million in 2015 (Figure 6). The increase occurred in both private and public sectors; in the private sector from 6.8 million (2014) to 7.8 million (2015) and 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.
Members with preserved pension entitlements (deferred members)
- A “short service refund” may be offered for members with less than 2 years’ service depending on scheme rules and when membership began. Further information can be found on the Pension Regulator’s website. The OPSS datasets include estimates for entrants and exits to schemes by reason for exit (Table 9).
Contribution rate questions are only asked of OPSS survey respondents in the private sector. Information on rates in the public sector is not collected as it is already publicly accessible, for example, from individual scheme resource accounts.
Most member (employee) and employer contributions are made as a percentage of salary, excluding bonuses. However, fixed amount payments can be made as part of the schedule of normal (or regular) contributions. On the other hand, when schemes make “special” cash payments (for example, to address a deficit in a defined benefit (DB) scheme’s liabilities), these payments 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 defined contribution (DC) schemes in 2015 (Figure 7):
for DB schemes, the average total contribution rate was 21.2% of pensionable earnings: 5.0% for members and 16.2% for employers
for DC schemes, the average total contribution rate was 4.0% of pensionable earnings: 1.5% for members and 2.5% for employers
In private sector career average schemes (revalued in line with prices – see Background note 3), average employer contribution rates were lower than for DB schemes as a whole. In 2015, the rate for career average schemes was 12.9% compared with 16.2% for all DB schemes. Average member contribution rates in career average schemes were fairly similar to the average rate for all DB schemes (5.5% and 5.0% respectively).
As part of the workplace pension reforms, minimum levels for employer and employee contributions will be phased in over the period to 2019 (see Background note 2). A rise in the number of new members starting on the minimum rates would pull down the average contribution rate.
As with the other findings presented, the contribution rate figures are estimates which should be interpreted with caution. Measures of the data quality for the main data series (including contribution rates) are presented in the OPSS standard errors tables.
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The OPSS Quality and Methodology Information document contains important information on:
the strengths and limitations of the data and how it compares with related data
users and uses of the data
how the output was created
the quality of the output including the accuracy of the data
Standard errors for the main membership and contribution rate estimates are available in the associated datasets, along with response rates.Nôl i'r tabl cynnwys