'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.
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).
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).
|Pensions in payment||0.0||0.0||0.0||0.0||0.0||0.0||0.0||0.0|
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.
|Percentage of pensionable earnings||7||12|
|Percentage plus a fixed amount||2||2|
|Fixed amount only||36||85|
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.
|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|
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.
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: email@example.com
These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.