This short story about very small schemes is based on the Occupational Pension Schemes Survey (OPSS) 2012 and covers occupational schemes with 2 to 11 members. It provides estimates relating to membership, contributions, benefits and investment decisions for such schemes in 2012.
Headline results from the Occupational Pensions Schemes Survey (OPSS) 2012 were released in September 2013. This article relates only to those occupational pension schemes which have between 2 and 11 members, referred to here as very small schemes. Schemes with fewer than 2 members are not included in the survey1.
The legislation relating to very small schemes differs in some respects from that relating to larger schemes2. These schemes are also unusual because, in many cases, all of their members are trustees.
In 2012, the estimated number of very small private sector schemes in the UK was 35,610. 80% of private sector occupational pension schemes were very small schemes. However, very small schemes accounted for only 1% of active membership of all (public and private sector) occupational pension schemes3.
The background notes give links to survey methodology articles.
See 'Trustee knowledge and understanding section' on the Pensions Regulator website.
According to the Occupational Pension Schemes Survey, 83% of active members in very small (public and private sector) schemes in 2012 were in schemes with 2 to 4 active members. Continuing the pattern of recent years, the majority of active members (87% in 2012) belonged to defined contribution schemes.
Table A1 in the Appendix (61.5 Kb Excel sheet) shows membership of very small schemes by membership type between 2004 and 2012, focussing on the private sector only. In 2012:
active members (those currently contributing or having contributions made on their behalf) made up 53% of total membership,
pensioner members (those receiving pension payments) made up 25% of total membership, and
deferred members1 (those with preserved pension entitlements) made up the remaining 22% of total membership.
There appears to have been a decline in total membership of very small schemes between 2004 and 2012 (from around 0.3 million to around 0.1 million). The number of active members also appears to have fallen over this period (from around 0.2 million in 2004 to under 0.1 million in 2012). However, the limited number of responses means that the confidence intervals around these estimates are very high.
The Occupational Pension Schemes Survey (OPSS) asked very small private sector schemes whether contributions were being made at the survey reference date of 6 April 2012. Over half of active members1 (56%) were in schemes where contributions were being made as at 6 April 2012 by the member, by the employer, or both.
Table 1 presents information for very small private sector schemes where contributions were being made in 2012. 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.
Nearly two-thirds (64%) of active members were not making any contributions themselves. Contributions came solely from the employer.
Around 79% of active members were in schemes where employer contributions were made as fixed amounts only.
The proportion of active members who contributed as a fixed amount only was 22%.
These estimates have not changed appreciably since 2010, when the questions were first asked on this basis. The limited number of responses means that the confidence intervals around these estimates are very high.
|Percentage of pensionable earnings||12||13|
|Percentage plus a fixed amount||2||8|
|Fixed amount only||22||79|
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. Approximately 60% of active members in 2012 were in schemes where contributions might be varied.
Very small pension schemes were also asked what benefits they provide to members when the pension is paid (see Table 2 below).
Benefits were paid on death of a pensioner for three-quarters (75%) of active members.
The proportion of active members in very small schemes who would receive benefits on ill health retirement was 22%.
Benefits on death in service were paid for 22% of active members.
|Benefits paid on retirement on ill-health grounds, over and above any benefit available from the member's account||22|
|Benefits paid on death in service, over and above any benefit available from the member's account||22|
|Benefits paid on death of a pensioner||75|
While the proportion of active members in very small schemes accruing benefits on death of a pensioner has remained broadly stable since 2008, the proportions accruing benefits on ill health or death in service appears to have fallen over the same period. However, the confidence intervals around these estimates are very high.
Very small private sector schemes were asked to say how they took investment decisions in 2012. The options given were:
in common, with decisions taken jointly by all members (which represented 48% of active members),
in common, with decisions taken by trustees on behalf of the members (36% of active members), and
individual members made their own investment decisions for their own accounts (16% of active members).
Very small schemes were also asked whether their investments included any holding of shares in the sponsoring employer, loans to the sponsoring employer or holding of property occupied by the sponsoring employer. Schemes can invest in more than one type of investment. The results show that:
34% of active members in 2012 were in schemes holding property occupied by the sponsoring employer,
17% were in schemes where investments included loans to the sponsoring employer, and
8% were in schemes where investments included shares.
Since 2008, investment in property has been the most popular form of investment for very small schemes.
ONS conducts the Occupational Pension Schemes Survey from a sample of occupational pension schemes registered in the UK in both the public and private sectors. The survey presents a range of statistics, including membership of occupational pension schemes, contributions made by employees and employers and benefits provided by schemes. Estimates of membership include breakdowns by type of member and type of scheme.
The survey does not cover personal pensions, where individuals enter into a contract with a pension provider (usually an insurance company). This exclusion extends to group personal pensions (GPPs) and stakeholder pensions.
The schemes in the survey are selected at random within membership size bands from the pension schemes register, a list of all occupational pension schemes in the UK with two or more members that is maintained by the Pensions Regulator.
The estimates for occupational pension schemes as a whole are produced using a sample. This is achieved by ‘rating-up’ the data from responses, by reference to a sampling fraction and response rate, with different size bands rated up individually.
A Quality and Methodology Information (QMI) (60.4 Kb Pdf) report is available. The aims of the QMI report are to provide users with a greater understanding of our statistics, their quality and the methods that are used to create them.
All the tables for this publication (61.5 Kb Excel sheet) are available in the data section of this publication.
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.