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Defined Contribution (DC) pension savings

ONS looks at relevant pension statistics following the Budget and Queen’s speech 2014

What was announced in the Budget and Queen’s speech 2014?

In the Budget 2014, the government announced the intention to change the options available to people in accessing their Defined Contribution (DC) pension savings when they retire. These will be enacted through the Finance Bill 2014 and a new pensions tax bill.

In the Queen’s Speech 2014, the government announced that a new private pensions bill would seek to amend existing legislation in order to encourage new forms of workplace pensions.

What is a Defined Contribution (DC) pension?

In a DC type pension, usually an individual and their employer make contributions to the pension. The contributions are then invested in the stock market. When an individual retires they receive an individual pension pot, the size of which will depend on a number of factors, including the amount of contributions made and the performance of the investments made. DC pensions include occupational DC pensions and all stakeholder and personal pensions.

What does ONS data tell us about DC pensions in the UK?


The latest Annual Survey of Hours and Earnings (ASHE) release estimates that the proportion of employees contributing to a DC pension was 20% in April 20131. All non-workplace personal pensions are also DC in type; HMRC estimates that there were 5 million people contributing to these types of pensions in 2012/132.

DC pension participation differs between the public and private sectors. Table 1 shows that, in 2013, 75% of private sector employees with workplace pensions had a DC pension. In the public sector only 5% of employees with workplace pensions were in a DC scheme.

Table 1: Employees with workplace pensions: percentages by type of pension, 2013, UK

  Defined Benefit Defined Contribution Unknown  pension type
All employees 59.1 39.9 1.0
of which      
   Public sector 94.5 4.6 0.9
   Private sector 24.0 74.9 1.1

Table notes:

  1. Source: Annual Survey of Hours and Earnings (ASHE)

  2. The public and private sectors are classified using the legal status from the Inter-Departmental Business Register. ‘All employees’ includes employees from the public and private sectors plus employees.
  3. Defined Contribution pensions include Occupational, Group stakeholder and Group personal pensions.

Download table


Most employees and their employers make contributions to an occupational DC pension as a percentage of salary, excluding bonuses. The Occupational Pension Schemes Survey (OPSS) estimates that, for private sector occupational DC schemes, the average contribution rate in 2012 was 3.1% of salary for employees and 6.6% of salary for employers.


The Wave 3 release of Wealth in Great Britain estimates that in 2010 to 2012, the median average pension wealth of individuals with DC type pensions from which they had not yet drawn an income was £15,000. The median average for all pension types was £33,000.


The types and levels of investments made by pension schemes are currently monitored within MQ5, Investment by Insurance Companies, Pension Funds and Trusts. Net investment in gilts by insurance companies, pension funds and trusts was around £23 billion in 2013. Pension funds were the largest investors in gilts in 2013.

Where can I find more information?

If you would like to find out more information about the proposed changes to pensions announced in the Budget and Queen’s speech 2014 see HM Treasury: Freedom and choice in pensions, HM Treasury: Budget 2014 Greater choice in pensions explained or Department for Work and Pensions: Reinvigorating Workplace Pensions.

For more information on ONS pension statistics, Pension Trends draws together statistics from the ONS, government departments such as the Department for Work and Pensions (DWP) and other organisations to highlight the complex issues that shape trends in pension provision in the UK. 

If you have any comments or suggestions, we would like to hear them. Please email us at:


  1. In the Annual Survey of Hours and Earnings (ASHE), the proportion of employees with Defined Contribution (DC) type pensions refers to those employees with Occupational DC, Group Personal or Group Stakeholder type pensions.

  2. Non-employer sponsored schemes are contracts set-up by a financial institution and offered for sale to the public, and include schemes arranged via Trade Unions or other bodies. The number of people contributing relates to members of each reporting provider and should not be taken as numbers of individuals, since individuals can have more than one pension provider. For more information regarding HMRC personal pension data see: HMRC Personal Pensions Statistics Introduction 2014.

Categories: Economy, Personal Finances, Pensions, Occupational and personal pensions
Content from the Office for National Statistics.
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