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Chapter 7: Very Small Schemes - OPSS Annual Report, 2011 This product is designated as National Statistics

Released: 19 September 2012 Download PDF

Abstract

'Chapter 7: Very small schemes' of the Occupational Pension Schemes Survey (OPSS) annual report 2011 covers occupational schemes with 2 to 11 members. It provides estimates relating to membership, contributions, benefits and investment decisions for such schemes in 2011.

Introduction

Occupational pension schemes which have between 2 and 11 members are referred to in this report as very small schemes. Schemes with fewer than 2 members are not included in the survey. The legislation relating to very small schemes differs in some respects from that relating to larger schemes. These schemes are also unusual because, in many cases, all of their members are trustees. In addition, some schemes target a particular level of benefit. Very small schemes were sent a shorter questionnaire than that sent to other defined benefit and defined contribution schemes, as many of the more detailed questions would not apply to them.

In this chapter, we present the analysis of the information received from very small schemes. The results come from the responses to the very small schemes questionnaire and from returns from those responding to questionnaires designed for larger schemes where the schemes turned out to belong to the 2 to 11 member category. It should be noted that a comparatively small sample of schemes was selected from the 2 to 11 member category (see Chapter 10), so the results are less robust than those for larger schemes. Of the 210 very small schemes that responded in 2011, 198 were in the private sector.

In 2011, 79 per cent of private sector occupational pension schemes were very small schemes (see Chapter 2). However, very small schemes accounted for only 1 per cent of active membership of occupational pension schemes in 2011 (see Chapter 3).

Membership

84 per cent of active members in very small schemes were in schemes with 2 to 4 active members in 2011. 90 per cent of active members of very small schemes belonged to defined contribution schemes.

Table 7.1 shows membership of very small private sector schemes by membership type:

  • Active members made up 57 per cent of total membership.

  • Pensioner members who were receiving pension payments made up 18 per cent of total membership.

  • Deferred members made up 25 per cent of total membership.

Deferred members are those with preserved pension entitlements which include widows, widowers, dependants and pension credit members with some preserved pension. (Pension credit members in this context meaning former spouses of members who have gained their rights as a result of a pension credit following pension sharing on divorce.)

There appears to have been a decline in the numbers of active and deferred members between 2004 and 2011. However, the limited number of responses means that the confidence intervals around these estimates are very high (see Chapter 10).

Table 7.1: Number of members of very small private sector occupational pension schemes: by membership type, 2004 to 2011 (UK, millions)

  2004 2005 2006 2007 2008 2009 2010 2011
Active members 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Pensions in payment 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Deferred members 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Table source: Office for National Statistics

Table notes:

  1. Changes to methodology for 2006 onwards mean that comparisons with 2005 and earlier should be treated with caution.
  2. Changes to the part of the questionnaire used to estimate pensions in payment and preserved pension entitlements in 2008 mean that comparisons with 2007 and earlier should be treated with caution.

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Contributions and benefits

The survey asked whether contributions were made as of the survey reference date of 6 April 2011: over half of active members (54 per cent) were in schemes where contributions were being made either by the member or the employer or both.

Table 7.2 presents information for schemes where contributions were being made in 2011. It shows the proportion of active members in relation to whether the member and the employer were contributing and, if so, what type of contributions they were making. 56 per cent of the active members in these schemes were not making any contributions themselves - contributions were solely from the employer. 85 per cent of active members were in schemes where employer contributions were made as fixed amounts.

Table 7.2: Proportion of active membership of very small occupational pension schemes where normal contributions were made: by contributor and type of contribution (if any), 2011 (UK, percentages)

  Member Employer
Percentage of pensionable earnings 7 12
Percentage plus a fixed amount 2 2
Fixed amount only 36 85
No contribution 56  

Table source: Office for National Statistics

Table notes:

  1. Percentages are calculated excluding non-response.

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Schemes were also asked about whether contributions might be varied so as to target particular levels of benefit, to maximise benefits or for other reasons. Just over half of active members in schemes where contributions were made in 2011 were in schemes where contributions might be varied.

Table 7.3: Proportion of active members of very small occupational pension schemes with benefits related to ill health and death, 2011 (UK, percentages)

Benefits paid on retirement on ill-health grounds, over and above any benefit available from the member's account 39
Benefits paid on death in service, over and above any benefit available from the member's account 45
Benefits paid on death of a pensioner 77

Table source: Office for National Statistics

Table notes:

  1. Percentages are calculated excluding non-response.

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Investment by very small schemes

Very small schemes were asked to say how they took investment decisions in 2011. The options given were:

  • In common, with decisions taken jointly by all members,

  • In common, with decisions taken by trustees on behalf of the members,

  • Individual members made their own investment decisions for their own accounts.

Investment decisions were made jointly by all members for 38 per cent of active members in schemes which used one of these approaches. 44 per cent of active members in these schemes were in schemes where trustees took decisions on behalf of members; and 18 per cent were in schemes where individual members made decisions for their own accounts.

Very small schemes were also asked whether their investments included any holding of shares in the sponsoring employer, loans to the sponsoring employer, holding of property occupied by the sponsoring employer, or other unlisted investment. The results show that 11 per cent of active members in 2011 were in schemes where investments included loans to the sponsoring employer and investments included unlisted investments, while 24 per cent were in schemes holding property occupied by the sponsoring employer and 3 per cent were in schemes where investments included shares.

Background notes

  1. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

    These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

Supporting information

Further information

Executive Summary: OPSS Annual Report, 2011 - The annual report of the Occupational Pension Schemes Survey presents results including membership, contribution rates and benefits relating to occupational pension schemes. The Executive Summary gives the key findings from each chapter.
Chapter 1: Introduction - OPSS Annual Report, 2011 - The annual report of the Occupational Pension Schemes Survey presents results including membership, contribution rates and benefits relating to occupational pension schemes. Chapter 1 introduces the report, explains the background to the survey and explains which results appear in which chapter.
Chapter 2: Scheme Numbers - OPSS Annual Report, 2011 - The annual report of the Occupational Pension Schemes Survey presents results including membership, contribution rates and benefits relating to occupational pension schemes. Chapter 2 provides estimates of the number of occupational pension schemes.
Chapter 3: Scheme Membership - OPSS Annual Report, 2011 - The annual report of the Occupational Pension Schemes Survey presents results including membership, contribution rates and benefits relating to occupational pension schemes. Chapter 3 provides estimates occupational pension scheme membership.
Chapter 4: Contributions - OPSS Annual Report, 2011 - The annual report of the Occupational Pension Schemes Survey presents results including membership, contribution rates and benefits relating to occupational pension schemes. Chapter 4 provides estimates of contribution rates to occupational pension schemes.
Chapter 5: Benefits in Defined Benefit Schemes - OPSS Annual Report, 2011 - The annual report of the Occupational Pension Schemes Survey presents results including membership, contribution rates and benefits relating to occupational pension schemes. Chapter 5 provides estimates on benefits provided to those in defined benefit occupational pension schemes.
Chapter 6: Benefits in Defined Contribution Schemes - OPSS Annual Report, 2011 - The annual report of the Occupational Pension Schemes Survey presents results including membership, contribution rates and benefits relating to occupational pension schemes. Chapter 6 provides estimates on benefits provided to those in defined contribution occupational pension schemes.
Chapter 8: Winding Up Schemes - OPSS Annual Report, 2011 - The annual report of the Occupational Pension Schemes Survey presents results including membership, contribution rates and benefits relating to occupational pension schemes. Chapter 8 provides estimates on schemes in the process of winding up.
Chapter 9: Changes to Schemes - OPSS Annual Report, 2011 - The annual report of the Occupational Pension Schemes Survey presents results including membership, contribution rates and benefits relating to occupational pension schemes. Chapter 9 provides estimates on changes to occupational pension scheme rules.
Chapter 10: Methodology - OPSS Annual Report, 2011 - The annual report of the Occupational Pension Schemes Survey presents results including membership, contribution rates and benefits relating to occupational pension schemes. Chapter 10 provides information on the survey methodology.
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