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Statistical bulletin: 2011 Annual Survey of Hours and Earnings: Summary of Pension Results (SOC 2000) This product is designated as National Statistics

Released: 24 February 2012 Download PDF

Key points:

  • In 2011, the proportion of employees who belonged to a workplace pension scheme was below half (48 per cent) for the first time since the series began in 1997.
  • In 2011, 83 per cent of public sector employees and 33 per cent of private sector employees were members of a workplace pension scheme.
  • The proportion of employees with defined benefit occupational pensions continues to fall. In 2011, 30 per cent of employees had this type of pension, compared with 46 per cent in 1997.

Background

ASHE is a key source of information on workplace pensions in the UK as it collects information on all types of workplace pension: occupational pension schemes, group personal pensions and group stakeholder pensions. The survey results are used widely in order to analyse pension participation and to monitor the impact of pension reforms.

ASHE collects information on employee membership of the current employer’s workplace pension scheme. This does not include preserved rights in any former employer’s pension scheme or pensions paid by former employers.

Workplace pension membership

Figure 1 shows pension participation by type of pension between 1997, when ASHE first collected the information, and 2011.  In 2011, the proportion of employees who belonged to a workplace pension scheme was 48 per cent, below half for the first time since the series began. In 1997, 55 per cent of employees belonged to a workplace pension scheme.

Although membership was 48 per cent overall in 2011, there was a significant difference between sectors:

  • 83 per cent of public sector employees were members of a workplace pension scheme and,

  • 33 per cent of private sector employees were members of a workplace pension scheme.

The fall in the proportion of employees with a workplace pension between 1997 and 2011 has been driven mainly by the fall in membership of defined benefit occupational pension schemes over the same period, from 46 per cent to 30 per cent. Membership of defined contribution occupational pension schemes also fell slightly, from 9 per cent to 6 per cent. Membership of group personal and group stakeholder pensions was 10 per cent in 2011, compared with 1 per cent in 1997 (before stakeholder pensions were introduced).

Figure 1: Proportion of employees with workplace pensions: by type of pension, 1997 to 2011

Proportion of employees with workplace pensions for: all pension types, occupational defined benefit, occupational defined contribution and group personal (including stakeholder) pensions.

Notes:

  1. Results for 2005 onwards are based on a new questionnaire and may not be comparable with earlier results.

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Figure 2 shows the proportion of employees who had a workplace pension in 2011 by type of pension. Although membership of defined benefit occupational pension schemes has declined since 1997, this was still the largest category of workplace pension in 2011; 63 per cent of employees with a workplace pension had this type of pension.

Figure 2: Proportion of employees with workplace pensions by type of pension, 2011

Pie chart showing proportions within each pension type (defined benefit, defined contribution, group personal, group stakeholder and unknown pension type).

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However, workplace pension participation differs between the public and private sectors. Table 3 shows that in 2011, 95 per cent of public sector employees with workplace pensions had a defined benefit occupational pension, but in the private sector only 29 per cent of employees with workplace pensions were in a defined benefit scheme. Conversely, defined contribution pensions – occupational, group personal and stakeholder – were more common in the private sector than in the public sector.

Table 3: Proportion of employees with workplace pensions by type of pension, 2011

Percentages

Occupational Defined Benefit Occupational Defined Contribution Group Personal Pension Group Stakeholder Pension Unknown pension type
All employees 63 13 14 8 2
of which
Public sector 95 2 1 1 2
Private sector 29 27 27 15 2

Table notes:

  1. The public and private sectors are classified using the legal status from the Inter-Departmental Business Register (see Definitions). ‘All employees’ includes employees from the public and private sectors plus employees working for organisations classified as non-profit bodies.
  2. Percentages may not sum to 100 due to rounding.

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Membership by age, working pattern, gender and earnings

Age is a key factor affecting workplace pension scheme membership. Figure 4 shows the proportion of employees with workplace pensions by age group:

  • young employees are less likely to be members of a workplace pension scheme than employees in their forties and fifties,

  • membership rates fall in the age bands around State Pension Age because many employees in these age bands are no longer contributing to a pension.

Figure 4: Proportion of employees with workplace pensions by age band and type of pension, 2011

Bar chart showing proportion of employees with pensions within each age band by pension type (defined benefit, defined contribution, group personal (incl stakeholder) and unknown pension type.

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Despite the decline in membership of defined benefit occupational pension schemes and the rise in participation in group personal and group stakeholder pensions over time, the current pattern of membership by age does not show major differences in type of pension between the age bands. This pattern has not changed significantly since 1997.

Nevertheless, there are some differences. For instance, in 2011:

  • 56 per cent of members in the 22 to 29 age band were in defined benefit occupational pension schemes, compared with 69 per cent in the 55 to 59 age band, 

  • 23 per cent of members in the 22 to 29 age band were in group personal or group stakeholder pensions, compared with 19 per cent in the 55 to 59 age band.

Workplace pension participation also varies by working pattern (full time or part time work), as shown in Figure 5.

Figure 5: Proportion with workplace pensions by sector, working pattern and gender, 2011

Two charts, one for each sector (public and private) showing proportion with pensions by full time/part time and male/female breakdowns.

Notes:

  1. The public and private sectors are classified using the legal status from the Inter-Departmental Business Register (see Definitions).

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Figure 5 shows that for full-time employees:

  • in the public sector, there is almost no difference in workplace pension participation for men and women (90 per cent of male and 89 per cent of female employees), 

  • in the private sector there is a difference: the proportion of male employees with a pension in 2011 was 42 per cent, compared with 35 per cent of female employees.

For part-time employees, the gap between male and female participation is greater, with a higher proportion of women than of men belonging to a workplace pension scheme in both sectors:

  • in the public sector, 73 per cent of part-time female employees were members in 2011 compared with 58 per cent of part-time male employees, 

  • in the private sector, 17 per cent of part-time female employees were members in 2011 compared with 8 per cent of part-time male employees.

Figure 6 shows the proportion of full-time employees with a pension by gross weekly earnings band. There is a strong relationship between earnings and workplace pension membership, particularly in the private sector where full-time employees with earnings of £600 per week and over are more than five times as likely to be members of a workplace pension as those earning £200 to £300 per week.

Figure 6: Proportion of full-time employees with workplace pensions: by sector and gross weekly earnings band, 2011

Bar chart showing proportions with pensions for public and private sector by weekly earnings bands (£<100, 100-200,200-300,300-400,400-500,500-600,600+).

Notes:

  1. The public and private sectors are classified using the legal status from the Inter-Departmental Business Register (see Definitions).

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Membership by occupation, size of employer and region

Membership of a workplace pension is also related to the employee’s occupation. Figure 7 shows the proportion of all employees with a workplace pension by occupation: 

  • those in professional occupations are most likely to have a pension (76 per cent of those in such occupations had a workplace pension in 2011),

  • those in sales and customer service occupations are least likely to have a pension (19 per cent of those in such occupations had a workplace pension in 2011).

Figure 7: Proportion of employees with workplace pensions: by occupation, 2011

Bar chart showing proportion of employees with pensions for the following occupations - professional, associate professional & technical, managers & senior officials, admin & secretarial, personal service, skilled trade, process, plant & machine operatives, elementary and sales and customer service.

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Figure 8 shows the proportion of employees with a pension by size of employer in 2011. In general, the larger the employer, the higher the proportion of employees with workplace pensions. However, membership rates were slightly lower in the category ‘5,000 employees or more’ than in the ‘1,000 to 4,999 employee’ size band, particularly in the private sector.

Figure 8: Proportion of employees with workplace pensions: by sector and size of employer, 2011

Proportion with pensions for public and private sectors by size of employer (no of employees= 1-12,13-99,100-499,500-999,1000-4999,5000+).

Notes:

  1. The public and private sectors are classified using the legal status from the Inter-Departmental Business Register (see Definitions).
  2. The proportion of public sector employees where employer size is between 1 and 12 employees has been suppressed due to small sample size.

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There is a weak relationship between the region where the employer is located and the proportion of employees with a workplace pension (Figure 9). However, in the private sector there are some differences:

  • membership is highest in London (38 per cent), 

  • membership is lowest in the North East of England (29 per cent).

Figure 9: Proportion of employees with workplace pensions: by sector and region, 2011

Proportion of employees in the public and private sector with pensions by the following regions: North East, North West, Yorkshire & the Humber, East Midlands, West Midlands, East, London, South East, South West, Wales and Scotland.

Notes:

  1. The public and private sectors are classified using the legal status from the Inter-Departmental Business Register (see Definitions).

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Contracting out of the additional state pension

Contracting out refers to a statutory arrangement under which pension schemes that meet certain conditions may contract out of the additional state pension. Members of a contracted out pension obtain rights in the workplace pension (a private pension) in place of rights to an additional state pension. Employee and employer National Insurance contributions are reduced or partially rebated.

Table 10 shows the proportion of employees with workplace pensions who were contracted out of the additional state pension in 1997 and in 2011. It shows results for all pension types (occupational defined benefit, occupational defined contribution, group personal pensions and group stakeholder pensions), as well as separate results for occupational pensions. Results are not shown separately for group personal and stakeholder pensions due to small sample sizes.

In 2011, nearly two-thirds (64 per cent) of employees with workplace pensions were in a ‘contracted out’ pension. This compares with 88 per cent in 1997, when this information was first collected.

Results vary by sector:

  • most public sector workers are in contracted out pensions,

  • in 2011, nearly one-third (31 per cent) of employees in the private sector were contracted out; this compares with 82 per cent in 1997.

In the private sector, results also vary by type of occupational pension scheme:

  • in 2011, 78 per cent of employees in private sector defined benefit schemes were contracted out; this compares with 94 per cent in 1997, 

  • in 2011, 21 per cent of private sector defined contribution scheme members were contracted out; this compares with 45 per cent in 1997.

Contracting out through all defined contribution pensions (occupational defined contribution pensions and personal and stakeholder pensions) is to be abolished from 6 April 2012.

Table 10: Proportion of employees with workplace pensions contracted out of the additional state pension, 1997 and 2011

Percentages

1997 2011
  All pension types Occupational Defined Benefit Occupational Defined Contribution All pension types Occupational Defined Benefit Occupational Defined Contribution
All employee types 88 97 43 64 91 22
of which
Public sector 96 100 36 94 95 42
Private sector 82 94 45 31 78 21

Table notes:

  1. The ‘all pension types’ column includes defined benefit, defined contribution, group personal and group stakeholder pensions but excludes cases where the pension type is unknown.
  2. Group personal and stakeholder pension figures are not shown due to small sample sizes.
  3. The public sector defined contribution figures are based on a fairly small sample size.
  4. The public and private sectors are classified using the legal status from the Inter-Departmental Business Register (see Definitions).

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Contributions to workplace pensions

ASHE also collects information on workplace pension contribution rates. Employee and employer contribution rate bands are shown by sector (Figures 11 and 12) and by pension type (Figures 13 and 14).

Contribution rates by age, occupation, industry and size of company are available in the reference tables published alongside this bulletin.

Figure 11 shows the proportion of employees in each employee contribution rate band for employees with workplace pensions in the public and private sectors in 2011:

  • 48 per cent of employees in the public sector and 10 per cent in the private sector contributed between 6 per cent and 7 per cent of pensionable earnings,

  • 4 per cent of employees in the public sector and 19 per cent in the private sector did not contribute to their pension (zero contributions).

Figure 11: Proportion of employees with workplace pensions: by banded rate of employee contribution and sector, 2011

Proportion with pensions for public and private sector by employee rate (banded%: 0, 0-<2, 2-<4,4-<5,5-<6,6-<7,7+)

Notes:

  1. The public and private sectors are classified using the legal status from the Inter-Departmental Business Register (see Definitions).

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Figure 12 shows the proportion of employees in each employer contribution rate band for all employees with workplace pensions in the public and private sectors in 2011: 

  • nearly half (48 per cent) of employees in the public sector and 11 per cent of those in the private sector received employer contributions of between 12 and 15 per cent of employees’ pensionable earnings,

  • nearly half (49 per cent) of employees in the private sector received employer contributions of less than 8 per cent of employees’ pensionable earnings, compared with 4 per cent in the public sector.

These estimates do not take account of contracted out status. Further breakdowns of employee and employer contribution rates by contracted out status can be found in the reference tables published alongside this release.

Figure 12: Proportion of employees with workplace pensions by banded rate of employer contribution and sector, 2011

Proportion with pensions for public and private sector by employer rate (banded%: 0, 0-<4, 4-<8,8-<10,10-<12,12-<15,15-<20,20+)

Notes:

  1. The public and private sectors are classified using the legal status from the Inter-Departmental Business Register (see Definitions).

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Figure 13 shows the proportion of employees in each employee contribution rate band for employees with workplace pensions by pension type.

In 2011, just over three-quarters of employees in defined benefit occupational pension schemes contributed over 5 per cent of their pensionable earnings, compared with around one-third of those in defined contribution occupational pension schemes and one-quarter of those with group personal and stakeholder pensions.

Figure 13: Proportion of employees with workplace pensions: by banded rate of employee contribution and pension type, 2011

Proportion with pensions for defined benefit, defined contribution and group personal (incl stakeholder) pensions by employee rate (banded%: 0, 0-<2, 2-<3,3-<4,4-<5,5-<6,6-<7,7+)

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Figure 14 shows the proportion of employees in each employer contribution rate band for all employees with workplace pensions by pension type. In 2011:

  • 70 per cent of employers with group personal or stakeholder pensions made contributions of less than 8 per cent of their employees’ pensionable earnings, compared with 47 per cent of those with defined contribution occupational pensions and 6 per cent of those with defined benefit occupational pensions, 

  • 46 per cent of employers with defined benefit occupational pension schemes made contributions of 15 per cent or more of employees’ pensionable earnings, compared with 14 per cent of those with defined contribution schemes and 6 per cent of those with group personal or stakeholder pensions.

Figure 14: Proportion of employees with workplace pensions: by banded rate of employer contribution and pension type, 2011

Proportion with pensions for defined benefit, defined contribution and group personal (including stakeholder) pensions by employer rate (banded%: 0, 0-<4, 4-<8,8-<10,10-<12,12-<15,15-<20,20+)

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Definitions

Contracted out: This refers to a statutory arrangement under which pension schemes that meet certain conditions may contract out of the State Second Pension (S2P), formerly the State Earnings-Related Pension Scheme (SERPS). The members’ and employers’ National Insurance contributions are reduced or partially rebated. Members of a contracted out pension scheme obtain rights in the scheme in place of rights to an additional state pension. Contracting out through defined contribution schemes (occupational defined contribution, personal and stakeholder pensions) is to be abolished from 6 April 2012. Anyone contracted out of a defined contribution scheme at that time will automatically be contracted back into the State Second Pension. Contracting out through an occupational defined benefit scheme will continue although this is currently under review by the Department for Work and Pensions.

Contributions: Payments into a pension by employees (and other individuals) or by employers.

Defined Benefit scheme: An occupational pension scheme in which the rules specify the rate of benefits to be paid. The most common defined benefit scheme is a salary-related scheme in which the benefits are based on the number of years of pensionable service, the accrual rate and either the final salary, the average of selected years’ salaries or the best year’s salary within a specified period before retirement.

Defined Contribution scheme: A pension scheme in which the benefits are determined by the contributions paid into the scheme, the investment return on those contributions, and the type of annuity (if any) purchased upon retirement. It is also known as a money purchase scheme. Defined contribution pensions may be occupational, personal or stakeholder pensions.

Group Personal Pension (GPP): An arrangement made for the employees of a particular employer or group of employers to participate in a personal pension on a group basis. This is a collecting arrangement only; the contract is between the individual and the pension provider, normally an insurance company. In ASHE, this category also includes Group Self Invested Personal Pensions. GPPs are a form of workplace pension.

Group Self Invested Personal Pension (GSIPP): An arrangement made for the employees of a particular employer, or group of employers, to participate in a personal pension on a group basis. The GSIPP is similar to the Group Personal Pension except that it is the policy holder rather than the pension provider who chooses the investments. GSIPPs are a form of workplace pension. In ASHE, GSIPPs are not collected separately from Group Personal Pensions.

Group stakeholder pension: An arrangement made for the employees of a particular employer or group of employers to participate in a stakeholder pension on a group basis. This is a collecting arrangement only; the contract is between the individual and the pension provider, normally an insurance company. Group stakeholder pensions are a form of workplace pension.

Inter-Departmental Business Register: Introduced in 1994, the Inter-Departmental Business Register (IDBR) is the sampling frame for surveys of businesses carried out by the ONS and by other government departments. It is also a key data source for analysis of business activity.

Occupational Pension scheme: An arrangement (other than accident or permanent health insurance) organised by an employer (or on behalf of a group of employers) to provide benefits for employees on their retirement and for their dependants on their death. In the private sector, occupational schemes are trust-based. Occupational pension schemes are a form of workplace pension.

Pension scheme: A legal arrangement offering benefits to members upon retirement. Schemes are provided by employers and are differentiated by a wide range of rules governing membership eligibility, contributions, benefits and taxation. Pension schemes in the private sector have trustees. Personal pensions and stakeholder pensions offered by insurance companies may also be referred to as schemes, but technically they are individual accounts rather than schemes.

Personal pension: An arrangement where the contract to provide contributions in return for retirement benefits is between an individual and an insurance company. Such plans may be taken out by individuals on their own initiative - for example, to provide a primary source of retirement income for the self-employed, or to provide a secondary income to employees who are members of occupational schemes. These would not be covered in the ASHE results. Alternatively they may be facilitated by an employer. These pensions are covered by ASHE and include Group Personal Pensions and Group stakeholder pensions. Personal pensions are a form of defined contribution pension. 
 
Private sector schemes: Schemes covering the part of the economy consisting of individuals, firms and other institutions. In ASHE the public and private sectors are classified using the legal status from the Inter-Departmental Business Register. ‘All employees’ categories include employees from the public and private sectors plus employees working for organisations classified as non-profit bodies.

Public sector schemes: Schemes covering the part of the economy that is state-provided, including central and local government, schooling, health and social services, policing and the armed forces. In ASHE the public and private sectors are classified using the legal status from the Inter-Departmental Business Register. ‘All employees’ categories include employees from the public and private sectors plus employees working for organisations classified as non-profit bodies.

Stakeholder pension: Available since 2001, a flexible, portable, personal pension arrangement (provided by insurance companies) with capped management charges, that must meet the conditions set out in the Welfare Reform and Pensions Act 1999 and be registered with The Pensions Regulator. They can be taken out by an individual or facilitated by an employer. Stakeholder pensions are a form of defined contribution pension.

Standard Occupational Classification (SOC): The classificatory system used in the UK to place individuals into occupational groups.

Workplace pension: A workplace pension is a pension which is provided or facilitated via a workplace, principally for employees.  It includes both occupational pension schemes and all forms of group personal and group stakeholder pensions.

Background notes

  1. Releases

    Detailed tables on pensions from the 2011 survey are published alongside this bulletin.

    This release comprises:

    In addition to information on pensions, the Annual Survey of Hours and Earnings (ASHE) also provides information about the levels, distribution and make-up of earnings and hours worked for employees in various industrial, occupational and geographic breakdowns.

    In 2012, there will be an additional release of ASHE 2011 estimates based on the new occupational classification (SOC 2010). This will cover the whole of the published ASHE outputs including the pension information. 

  2. Methodology and quality information

    ASHE is based on a 1 per cent sample of employee jobs taken from HM Revenue & Customs (HMRC) PAYE records. Information is obtained from employers and treated confidentially. ASHE does not cover the self-employed nor does it cover employees not paid during the reference period. In 2011 information related to the pay period which included 13 April.

    Guidance and Methodology information for ASHE can be found on the ONS website.

    A Summary Quality Report for ASHE can also be found on the ONS website. This report describes, in detail, the intended uses of the statistics presented in this publication, their general quality and the methods used to produce them.

  3. Relevance to users

    ASHE is a key source of information on workplace pension provision in the UK as it collects information on group personal and group stakeholder pensions as well as occupational pension schemes. The survey results are used widely in order to analyse pension participation and monitor the impact of pension reforms.

    As ASHE is a survey of employers, it only covers workplace pensions, which are those that are either provided or facilitated by employers; it does not cover individual personal or stakeholder pensions, where individuals enter into a contract with an insurance company that is not facilitated by an employer.

    ASHE only collects information on the current employer’s pension scheme. An employee may hold preserved rights in a former employer’s pension scheme or be in receipt of a pension from a former employer. This information would not be captured by the survey. 

    In ASHE, employees are defined as making contributions to a workplace pension if they have made a contribution, or had a contribution made on their behalf, in the survey reference period.

  4. Publication policy

    Details of the policy governing the release of new data are available from the Media Relations Office A list of those given pre-publication access (35.2 Kb Pdf) to the contents of this release is available on the ONS website.

    National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.

    © Crown copyright 2012.

    You may use or re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gsi.gov.uk

    These National Statistics are released according to the arrangements approved by the UK Statistics Authority.

  5. 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

Statistical contacts

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Mark Williams +44 (0)1633 456120 Labour Market earnings@ons.gsi.gov.uk
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