The Office for National Statistics have released their latest Statistical Bulletin on Pensions entitled "Active members of occupational pensions: employer contribution rates and characteristics by pension benefit structure, 2014" A detailed snapshot of the state of occupational pensions in the UK, as well as providing a fascinating insight into this subject, it also enables us to look at the effect that auto enrolment is having. Below we take a look at some of the main findings:
In 2014, the number of people in the UK in an occupational pension scheme as an active member was 10.2 million. This was made up of 5.4 million in the public sector and 4.9 million in the private sector. It is the latter that has seen the most change since the last figures were compiled in 2011, with a rise from just 2.9 million people being active members of an occupational pension scheme in the private sector in 2011, to 4.9 million in 2014. There is no doubt that this dramatic rise is due almost in its entirety to the introduction of auto enrolment. As we are only half way through the process, it is expected that this number will rise even more by the time this is completed in 2018.
There has been a dramatic change to the proportion of active members of defined contribution (also known as money purchase) pension schemes. In 2011, just 50% of people in these sort of schemes worked in companies that employed more than 10,000 staff. Now, 82% of active members of DC schemes work in large, 10,000+ employees organisations. This is again explained by auto enrolment, which has been rolled out focussing on the largest businesses in the UK first. That means that this 82% figure should reduce considerably as more and more people in medium, small and micro businesses join schemes through auto enrolment over the next three years.
There is no doubt that the introduction of auto enrolment has had seismic effects on the UK's pensions and benefits outlook. Faced with an ageing population and a looming pensions crisis, the fact that more and more people are saving for their retirement can only be good news for the UK and its economy. The fact that auto enrolment is just 50% through its rollout means that we should see lots more positive outcomes to come.