The executive summary of the OPSS annual report 2011 gives the key findings from each of the survey topics.
This report presents the results of the 2011 Occupational Pension Schemes Survey (OPSS), carried out by the Office for National Statistics (ONS). It compares the 2011 findings with those of earlier surveys. This executive summary details some of the key findings. Full results on each topic can be found in the relevant chapters. Background and context to the survey can be found in Chapter 1.
OPSS does not cover other workplace pensions such as group personal pensions (GPPs) or group stakeholder pensions, which are based on individuals entering into a contract with a pension provider; nor does it cover state pensions.
Chapter 2 presents results on numbers of private sector occupational pension schemes.
In 2011, the estimated total number of private sector occupational pension schemes with 2 or more members in the UK was 44,190. Of this total, there were estimated to be 22,690 schemes that were open to new members.
The majority of private sector occupational pension schemes, 79 per cent, were very small (2 to 11 members). Large schemes, with 5,000 or more members, accounted for only 1 per cent of all schemes in 2011.
In 2011, single section schemes accounted for almost all private sector occupational pension schemes (99 per cent). Most open private sector schemes with only one section in 2011 were defined contribution schemes (87 per cent of the total).
Chapter 3 presents the results on membership1 of occupational pension schemes.
In 2011, total membership of occupational pension schemes in the UK was estimated to be 27.2 million, the same as in 2010. Of the total in 2011, 13.0 million were in public sector schemes and 14.2 million were in private sector schemes.
In 2011, there were an estimated 8.2 million active members of occupational pension schemes: 5.3 million in public sector schemes and 2.9 million in private sector schemes.
The estimated total number of pensions in payment was 9.2 million and the number of preserved pension entitlements was 9.8 million.
Active membership of private sector defined benefit schemes fell from 3.0 million in 2006 to 1.9 million in 2011, while active membership of private sector defined contribution schemes remained fairly stable at around one million (0.9 million in 2011).
In 2011, 65 per cent of active members in public sector defined benefit schemes were in schemes that were open to new members, compared with only 45 per cent of active members of private sector defined benefit schemes. Most active members of private sector defined contribution schemes (90 per cent) were in open schemes.
These estimates do not represent the number of people as individuals may have more than one type of membership (active, deferred or pensioner).
Chapter 4 presents the results on contributions to schemes with 12 or more members.
In 2011, for defined benefit schemes in the private sector, the average contribution rate was 4.9 per cent for members and 14.2 per cent for employers.
For private sector defined contribution schemes, the average contribution rate was only 2.8 per cent for members and 6.6 per cent for employers.
In price indexed ‘career average’ schemes, average employer contribution rates (11.5 per cent) were lower than for defined benefit schemes as a whole, but average member contribution rates were slightly higher (5.4 per cent).
In 2011, 88 per cent of active members of private sector defined benefit schemes and 80 per cent of active members of defined contribution schemes belonged to schemes where members made contributions.
Most employers contributed in 2011 - employer contribution rates were less than 8 per cent for more than half of active members of defined contribution schemes.
Chapter 5 presents results on benefits provided by defined benefit schemes with 12 or more members.
In unfunded public sector schemes, 70 per cent of active members accrued benefits at 80ths plus a 3/80ths lump sum in 2011. The most common accrual rate for funded public sector schemes was 60ths. In the private sector in 2011, two-thirds of those accruing benefits at 60ths, the most common accrual rate, were in sections of schemes that were closed to new entrants.
Commutation rates in the public sector were less generous than in the private sector in 2011. In public sector schemes with a normal pension age of 65, almost all members had commutation rates of between 12 and 14 (i.e. for every £1 of annual pension given up by members, they would receive a lump sum of between £12 and £14). In private sector schemes with a normal pension age of 65, male commutation rates of 14 or more were available in schemes representing 35 per cent of members in 2011. Female commutation rates of 14 or more were available in schemes representing 43 per cent of members.
Most private sector defined benefit schemes use final pensionable earnings, final salary or a similar approach, to calculate benefits in retirement. However, in 2011 (as in 2010), 0.3 million active members were in schemes where all members’ benefits were calculated on a ‘career average’ basis, most of these were in schemes where pension entitlements were price indexed.
Chapter 6 presents results on benefits provided by defined contribution schemes with 12 or more members. In defined contribution occupational pension schemes, all of which are in the private sector, the level of pension is determined not by scheme rules but by investment performance and annuity market outcomes.
In 2011, in addition to a pension, almost all schemes offered a lump sum at normal pension age.
In 2011, where death in service benefits were paid as a lump sum, the most common way of calculating them was as a multiple of four times salary or greater.
Chapter 7 considers occupational pension schemes which have between 2 and 11 members.
In 2011, 79 per cent of private sector occupational pension schemes were very small schemes but they only accounted for 1 per cent of the active membership of occupational pension schemes.
57 per cent of the members of very small schemes in 2011 were active members.
90 per cent of active members belonged to defined contribution schemes.
54 per cent of active members of very small schemes in 2011 were in schemes where contributions were being made by the member or the employer, or both.
Chapter 8 presents information on schemes in the process of winding up.
In 2011, there were an estimated 376,000 members of private sector occupational pension schemes winding up in the UK. This figure comprised 99,300 members receiving pension payments and 276,700 deferred members.
In 2011, 69 per cent of members in private sector winding up schemes were in defined benefit schemes. 64 per cent of the members of defined benefit schemes which were winding up were deferred members, compared with 94 per cent in defined contribution schemes.
In 2011, 49 per cent of members of winding up schemes with one sponsoring employer belonged to schemes where the employer was insolvent.
Chapter 9 presents results on the main changes to pension schemes and analyses the experience of scheme members who continue to work beyond normal pension age.
The most common change for private sector defined benefit schemes in 2011 was an increase in member or employer contribution rates, affecting 52 per cent of members.
For defined contribution schemes, the most common change in 2011 was an increase in the range of funds offered, affecting 46 per cent of active members.
The proportion of active members of private sector defined benefit schemes able to continue working beyond normal pension age and draw a pension at the same time fell between 2008 and 2011, from 73 per cent to 59 per cent.
For 91 per cent of active members of private sector schemes in 2011, the employer would continue to contribute to the member’s pension if the member continued to work beyond normal pension age. This has increased from 2008, when the employer would continue to contribute to the member’s pension if the member continued to work beyond normal pension age for 84 per cent of those in defined benefit schemes and 82 per cent of those in defined contribution schemes.
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