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Video Summary: Latest on Occupational Pension Schemes, 2011

Released: 19 September 2012

Also in this release

Transcript – Occupational pension schemes Annual Report 2011

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This is a transcript of the video podcast which can be viewed at http://www.youtube.com/watch?v= 32hEwintUQ8

 

Slide 1 Occupational Pension Schemes – nn:nn to nn:nn

This is a podcast on occupational pension schemes.

For a transcript email info@ons.gov.uk .

   

 

Slide 2 Workplace pensions in the UK – nn:nn to nn:nn

 

Workplace pensions are a form of private pension. In the UK there are two types of workplace pensions

 

- occupational pensions, which are provided by employers, and

 

- group personal pensions, including stakeholder pensions, which are organised through the employer but provided by insurance companies

 

The information in this podcast relates only to occupational pensions, schemes which provide pensions to those who have worked as employees in the public or private sectors, or to their dependents

 

It comes from the 2010 Occupational Pension Schemes Survey

 

There are three types of people in occupational pension schemes:

Active members, or employees, who are currently building up rights to a pension through the payment of contributions

Pensioner members, mainly former employees who are drawing a regular pension and

Members with preserved pensions, who will receive a pension from a previous employer when they retire

 

Individuals may fall into more than one of these three categories, for example an individual may be in receipt of a pension from a former employer but still working and contributing to a pension. This person would appear in both the pensioner and active member categories.

 

 

Slide 3: Active membership – nn:nn to nn:nn

 

This chart shows active members – that is, employees who are contributing to a pension or whose employer is contributing on their behalf – from the Occupational Pension Schemes Survey.

The survey was first run in 1953, then in 1956 and 1963, and then every four or five years until 2004, when it became an annual survey.

 

In 1953 there were 6.2 million active members of occupational pension schemes. The highest number of active members was recorded in 1967, when there were 12.2 million. In 2010 there were 8.3 million active members, the lowest level since the 1950s.

 

Now, we will show the active membership figures for the private and public sectors.

 

In 1953, active membership of occupational schemes was divided equally between the private and public sectors, each with around 3.1 million members.

 

 

Between 1956 and 2000, the number of active members in the private sector was higher than the number of active members in the public sector. But private sector membership has fallen in every survey from the early 1990s.

 

Since 2004, public sector membership has overtaken private sector membership as numbers in the private sector have fallen sharply.

In 2010, almost two-thirds of active members were in the public sector.

 

Slide 4: Total membership – nn:nn to nn:nn

 

In 2010 the total membership of occupational pension schemes was 27.2 million.

If we show this in a pie chart we can see how this figure is split into the three types of members.

31 per cent, 8.3 million are active members

33 per cent, 9 million are pensioner members, and

the largest share, at 36 per cent or 9.8 million are those members with preserved pensions.

 

 

Slide 5: Active membership by scheme type – nn:nn to nn:nn

 

Now we will look at membership by type of pension scheme.

In Defined Benefit schemes, the rules of the scheme specify the rate of benefits to be paid, so members can calculate in advance the amount that they will receive as a pension (if they make assumptions about their salary and the number of years they will work). Examples are final salary schemes, where the pension is calculated as a proportion of the employee’s final salary; and career average schemes, where the average salary over the entire career is used to calculate the pension.

 

Pensions from Defined Contribution schemes – also known as money purchase schemes – cannot be calculated in advance because they depend on the amount contributed into the pension while working, how well the investment does and any annuity that may be purchased on retirement.

 

Slide 6: Active membership by scheme type – nn:nn to nn:nn

 

Now we will look at the 8.3 million active members in 2010 who were contributing to a pension or whose employer was contributing on their behalf.

This pie chart shows there were 7.4 million active members of Defined Benefit schemes and 1 million in Defined Contribution schemes.

 

We have not shown a chart for the public sector as all occupational schemes in the public sector are Defined Benefit.

 

In the private sector, shown here, there were 2.1 million active members of Defined Benefit and 1 million in Defined Contribution schemes.

 

Of the 2.1 million active members of private sector Defined Benefit schemes, 0.3 million were in career average schemes.

 

 

Slide 7: Contributions to occupational pension schemes – nn:nn to nn:nn

Now we will look at contribution rates in the private sector in 2010. Contribution rates are the proportion of gross salary excluding bonuses that is paid into the pension. Contributions can be made by both the employee and the employer. This chart shows average contribution rates for employees and employers.

 

We will consider Defined Benefit and Defined Contribution schemes separately.

 

First, focusing on employees, this slide shows that the average employee in a private sector Defined Benefit scheme contributed 5.1 per cent of their salary to their pension in 2010. This compared with 2.7 per cent for employees in Defined Contribution schemes.

 

The corresponding proportions contributed by employers in 2010 were 15.8 per cent in Defined Benefit and 6.2 per cent in Defined Contribution schemes.

 

Contribution rates to defined contribution schemes are therefore lower for both employee and employer contributions

 

In ‘career average’ schemes, a subset of defined benefit schemes, average employer contribution rates were lower than for Defined Benefit schemes as a whole, at 11.8 per cent.  Average employee contribution rates were slightly higher, at 5.4 per cent. These figures are for schemes which revalue pension entitlements in line with prices.

 

 

Slide 8: For further information – nn:nn to nn:nn

 

The information in this podcast comes from the Occupational Pension Schemes Survey, now an annual survey of occupational schemes.

 

Further results from the 2010 survey are available in the annual report and statistical bulletin available on the ONS website.

 

For any queries regarding this podcast please e-mail pensionsanalysis@ons.gov.uk

This short video podcast, using audio commentary and graphical animations, shows some of the key results from the Occupational Pension Schemes Survey 2011:

  • Active membership of private and public sector occupational pensions.

  • Total membership - active members, pensioners and preserved pensions.

  • Active membership by type of benefit.

  • Contribution rates.

Source: Office for National Statistics

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.

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