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Pensions

Pension scheme members hit record high

Pension scheme members hit record high

Mark Dunne
Friday 29th September 2017

A record number of workers were members of an occupational pension scheme in 2016, according to the Office for National Statistics.

Almost 40 million people were part of such a retirement plan last year, 17% more than there were in 2015.

Auto-enrolment helped boost the number of those saving into a defined contribution (DC) scheme by 62.5% to 6.4 million.

However, the number of savers into a defined benefit (DB) plan fell. In 2016, these schemes had 1.3 million active members, down from 1.6 million in 2015.

This highlights the rising number of DB schemes that are closed to new members as companies look to cut costs and reduce risk. Indeed, active members of open DB schemes slumped to 500,000 from 1.4 million in 10 years.

So at 7.7 million there are more active private sector savers than there are in the public sector, which has 2 million fewer members.

Prudential retirement expert Vince Smith Hughes said the figures show that auto-enrolment is a success. “The number of people retiring without a pension has fallen significantly over the last 10 years and people retiring now tell us that they expect to live on about £18,000 a year.

“Prudential research shows auto-enrolment is encouraging people to make better plans for retirement with nearly three out of ten people admitting that they could save an additional £100 a month,” he added.

“That’s good news because over the past 10 years responsibility for providing a retirement income has shifted away from Government to individuals and the best approach is to save as much as you can as early as you can.”

Also raising the point that the UK’s retirement savings landscape is undergoing a shift was Old Mutual Wealth pensions expert Ian Browne.

“As the state pension age rises to catch-up with life expectancy increases and corporations wind-down their final salary pensions, the burden of responsibility is shifting to the individual,” he said.

“So it is encouraging that auto-enrolment is gaining momentum, with occupational pension participation reaching record highs.

“But that is not the full story,” he added. “Opt-out rates are low but not insignificant, and the real test will come in 2018 and 2019 when minimum contribution levels increase. They go up to 8% by 2019, and it will be important to keep an eye on participation rates then.”

Browne also points to large numbers of people excluded from these figures, such as the self-employed and those earning below the £10,000 auto-enrolment threshold.

“The earnings threshold is a particular issue for those working multiple jobs paying under £10,000, who are eligible for auto-enrolment based on total earnings but don’t get pulled into the system because their income is spread between several part-time roles.”

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