1. Main points

Total membership of occupational pension schemes in the UK was 33.5 million in 2015, the highest level recorded by the survey, representing an increase of 10% compared with 2014 (30.4 million). These estimates exclude participation in other workplace (group personal) pensions.

Active membership of occupational pension schemes was 11.1 million in 2015, split between the private (5.5 million) and public sector (5.6 million).

For private sector defined contribution schemes, the average total (member plus employer) contribution rate was 4.0% in 2015, broadly comparable with 2014.

Membership and contribution rates are likely to have been influenced by the recent workplace pension reforms (see Overview).

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2. Overview

The Occupational Pension Schemes Survey (OPSS) is an annual survey of occupational pension schemes in the UK, run by the Office for National Statistics (ONS). The survey was first undertaken in 1953, then in 1956 and 1963, and then every 4 to 5 years until 2004 when it became an annual survey. Until its transfer to ONS in 2006, OPSS was run by the Government Actuary’s Department (GAD).

The OPSS was among the business surveys included in our 2015 public consultation on changes to ONS products. Feedback from respondents reaffirmed the value of this survey, particularly in providing pension membership and contribution rate data for analysis and in monitoring the impact of policy changes such as automatic enrolment upon occupational pension schemes. This resulted in a decision to retain the OPSS survey for the present time.

The OPSS collects information from occupational pension schemes (consisting of 2 or more members), about scheme membership, benefits and contributions. It includes sections on very small schemes (schemes with 2 to 11 members) and those that are winding up. OPSS covers both private and public sector occupational pension schemes registered in the UK. Results from OPSS provide a detailed view of the nature of occupational pension provision in the UK.

OPSS does not cover state pensions or personal pensions, the latter being based on individuals entering into a contract with a pension provider. This exclusion extends to group personal pension (GPP) arrangements, such as stakeholder and self-invested personal pensions, where the contract is facilitated by the employer(s). Following feedback from stakeholders, we have started an experimental data collection from GPP providers. Estimates from this are not yet of an appropriate quality to form part of this National Statistics release.

This bulletin provides summary data on membership of schemes and contributions paid. Further information is available in the associated OPSS datasets or on request. To assist your understanding of these data, pension definitions are included as part of the background notes of this release with further detail in this Pension Trends glossary.

We are always seeking to refine the OPSS questionnaires to improve the estimates and capture data that reflects the changing pensions landscape. Some of the time series presented are, therefore, not directly comparable over time. If this is the case, caveats are included in the footnotes associated with the relevant chart or table.

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3. Workplace pension reforms (automatic enrolment)

This bulletin draws attention to differences in estimates for main variables between 2015 and preceding years. It is likely that these changes are a result of the workplace pension reforms introduced by the Department for Work and Pensions (DWP).

Starting in October 2012, with gradual roll-out by 2018, all employers have a duty to automatically enrol eligible employees into a qualifying pension scheme and to make contributions on their behalf. Automatic enrolment is being introduced in stages, based on the size of the employers’ PAYE scheme (as of 1 April 2012). Minimum contribution levels have also been introduced, in a phased process, with full implementation by 2019. For further information please see Background note 2.

It should be noted that the reforms are not taking place in isolation and other social and economic factors (for example, employment, disposable household income levels, attitudes to saving for retirement) would also affect membership and contribution rates.

DWP has published an automatic enrolment evaluation report on the reforms which references various sources.

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4. User engagement

We are constantly aiming to improve this release and its associated commentary. We would welcome any feedback you might have; please contact us via email: opss@ons.gsi.gov.uk or telephone Hazel Clarke on +44 (0)1633 455633.

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5. Membership of occupational pension schemes

Total membership of occupational pension schemes consists of:

  • active members (current employees who would normally contribute)

  • pensioner members (those receiving pension payments)

  • members with preserved pension entitlements (members who are no longer actively contributing into the scheme but have accrued rights that will come into payment at some point in the future)

Please note that individuals may have more than one of these types of membership. 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. Similarly, an individual might be working and contributing to a scheme while being entitled to a preserved pension from a previous employer’s scheme. This person would appear in both the active and preserved member categories. As such, the estimates of membership are not counts of individuals.

Overall estimated membership in 2015 was 33.5 million (Figure 1), split between:

  • 11.1 million active (employee) members

  • 10.6 million pensions in payment

  • 11.8 million preserved pension entitlements

The increases shown in each of the membership types over the last few years are discussed in the relevant following sections.

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6. Active membership

The active members of an occupational pension scheme are those who are contributing to the scheme, or having contributions made on their behalf. They are usually current employees of the sponsoring employer. This release includes breakdowns of active membership by sector (public or private), benefit structure (defined benefit or defined contribution) and status (for example, open or closed). Definitions, for example, for public sector, are given in the background notes – see Section 3.

Between 2013 and 2014, active membership increased significantly from 8.1 million to 10.2 million, with the estimate at 11.1 million in 2015 (Figure 2). The increase, almost entirely in the private sector, is likely to be due to the establishment of automatic enrolment explained in the “Workplace pension reforms” section. Estimates for the private sector showed a significant increase from 2.8 million to 5.5 million between 2013 and 2015.

Workplace pensions consist of occupational and group personal pensions (see Background note 3). According to the Annual Survey of Hours and Earnings (ASHE) pensions release, membership of occupational schemes accounted for around 70% of workplace pension membership in 2015.

Between 1991 and 2012, there was a slow but generally steady decrease in active membership. Some of this can be accounted for by the growth in the number of employees contributing to group personal pensions. The ASHE release estimates that less than 1% of employees had a group personal pension in 1997. By 2015, this had risen to around 18%.

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7. Active membership of private sector schemes by benefit structure and status

Active membership of private sector defined contribution (DC) schemes, which has remained around 1.0 million since 2008 (Figure 3), rose to 3.2 million in 2014 and 3.9 million in 2015 – caused by the rise in membership of open schemes (those which admitted new members – see Figure 4).

Active membership of private sector defined benefit (DB) schemes remained at around 1.6 million over the last 3 years (Figure 3). The fall in active membership of DB schemes (also shown in the datasets) is linked to the rising costs of providing these pensions. Partly due to DB schemes’ approach to dealing with risk and partly due to increased life expectancy, a growing number of private sector employers have sought to “de-risk” pension provision by closing DB schemes and replacing them with DC schemes. Active membership of open private sector DB schemes fell to 0.6 million in 2015, from 1.4 million in 2006.

The rise in DC membership over recent years is likely to be due to the workplace pension reforms – DC arrangements (including group personal pensions), were seen as the most likely route for employers to meet their new obligations under automatic enrolment. This is because, in DB schemes, the employer bears the investment risk and must pay out pensions at an agreed rate, regardless of the returns made on the invested contributions. In contrast, for DC schemes, members bear the risks as there is no promised level of pension payment. DB schemes are, therefore, potentially less attractive to employers than providing a DC occupational or group personal pension.

While employers could use DB schemes for automatic enrolment, the minimum requirements for a qualifying scheme focused on DC provision. If employers elected to meet their obligations through provision of a DB (rather than a DC) scheme, their “staging date” (the date by which time they needed to be compliant with the new legislation) could be delayed.

One reason why DC membership was expected to rise was that the National Employment Savings Trust (NEST) was set up as a DC scheme. NEST is a qualifying pension scheme, established under the Pensions Act 2008, to support the introduction of automatic enrolment (AE). Since AE began, various master trust arrangements have also become important players in the pensions market – again with provision typically on a DC basis. Master trusts involve a single provider managing a pension scheme for multiple employers under a single trust arrangement.

Some schemes have more than one section; offering benefits on a different basis to different groups of members (see Background note 3). In the private sector, only 36% of DB members were in sections of schemes that were open to new members compared with 97% of DC members (Figure 4).

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8. Pensioner membership (pensions in payment)

Pensioner members are those who are in receipt of pension payments. This section estimates the number of pensions in payment from UK occupational pension schemes in 2015. It includes pensions in payment to dependants, pension credit members (see Background note 3) and those who are still working for the same employer (for example, where they are partially retired).

These estimates do not represent the total number of pensioners in the UK receiving benefits from occupational pension schemes because an individual pensioner may be in receipt of more than one pension. The estimates do not include annuities (or other retirement products), purchased by members of DC occupational pension schemes upon retirement.

While it is not a direct comparison (for reasons mentioned previously and, for example, that people move between sectors, change employers), the increase in active membership in the 1950s and 1960s (Table 2 in the datasets) should be broadly reflected in the current pensions in payment figures (Figure 5), as that cohort of employees reaches retirement age. While changes to methodology mean that comparisons over time should be treated with caution, the total number of occupational pensions in payment has risen, from 0.9 million in 1953 to 10.6 million in 2015. Estimates of pensions in payment in both the public and private sectors have risen since 1953, reaching 4.7 million and 5.9 million respectively in 2015.

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9. Members with preserved pension entitlements (deferred members)

When active employee members leave the employment of the scheme’s sponsoring employer, they usually have a choice of what to do with the benefits accrued in the scheme. The default position for members is generally1 a preserved pension entitlement, where the rights remain in the scheme and a pension comes into payment at normal pension age. These estimates do not represent the number of individuals with preserved pension entitlements but show the number of preserved pensions. The estimates also include dependants and pension credit members (see Background note 3) who have a preserved pension entitlement and those still working for the employer (this may occur when an employer stops provision or changes to a different type).

The total number of preserved pension entitlements increased from 10.6 million in 2014 to 11.8 million in 2015 (Figure 6). The increase occurred in both private and public sectors; in the private sector from 6.8 million (2014) to 7.8 million (2015) and in the public sector from 3.8 million (2014) to 4.0 million (2015).

Changes in preserved pension entitlements may be affected by automatic enrolment. For example, if employers close existing schemes and move all their eligible employees to a new scheme based on the automatic enrolment qualifying criteria, these employees will appear in the estimates of both active and preserved members. This may, therefore, have had a bearing on the increase in numbers of preserved pension entitlements.

Members with preserved pension entitlements (deferred members)

  1. A “short service refund” may be offered for members with less than 2 years’ service depending on scheme rules and when membership began. Further information can be found on the Pension Regulator’s website. The OPSS datasets include estimates for entrants and exits to schemes by reason for exit (Table 9).
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10. Contribution rates in private sector occupational pension schemes

Contribution rate questions are only asked of OPSS survey respondents in the private sector. Information on rates in the public sector is not collected as it is already publicly accessible, for example, from individual scheme resource accounts.

Most member (employee) and employer contributions are made as a percentage of salary, excluding bonuses. However, fixed amount payments can be made as part of the schedule of normal (or regular) contributions. On the other hand, when schemes make “special” cash payments (for example, to address a deficit in a defined benefit (DB) scheme’s liabilities), these payments are not considered normal contributions and information on such payments is not collected by the survey.

Estimates for contribution rates were broadly comparable with 2014. As in previous years, private sector DB schemes had higher contribution rates than defined contribution (DC) schemes in 2015 (Figure 7):

  • for DB schemes, the average total contribution rate was 21.2% of pensionable earnings: 5.0% for members and 16.2% for employers

  • for DC schemes, the average total contribution rate was 4.0% of pensionable earnings: 1.5% for members and 2.5% for employers

In private sector career average schemes (revalued in line with prices – see Background note 3), average employer contribution rates were lower than for DB schemes as a whole. In 2015, the rate for career average schemes was 12.9% compared with 16.2% for all DB schemes. Average member contribution rates in career average schemes were fairly similar to the average rate for all DB schemes (5.5% and 5.0% respectively).

As part of the workplace pension reforms, minimum levels for employer and employee contributions will be phased in over the period to 2019 (see Background note 2). A rise in the number of new members starting on the minimum rates would pull down the average contribution rate.

As with the other findings presented, the contribution rate figures are estimates which should be interpreted with caution. Measures of the data quality for the main data series (including contribution rates) are presented in the OPSS standard errors tables.

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11. Quality and methodology

The OPSS Quality and Methodology Information document contains important information on:

  • the strengths and limitations of the data and how it compares with related data

  • users and uses of the data

  • how the output was created

  • the quality of the output including the accuracy of the data

Standard errors for the main membership and contribution rate estimates are available in the associated datasets, along with response rates.

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12 .Background notes

1. General information

We conduct the Occupational Pension Schemes Survey (OPSS) from a sample of public and private sector occupational schemes registered in the UK. 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 pension (GPP) arrangements, such as stakeholder and self-invested personal pensions, where the contract is facilitated by the employer(s). Following feedback from stakeholders, we have started an experimental data collection from GPP providers. Estimates from this are not yet of an appropriate quality to form part of this National Statistics release.

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 2 or more members that is maintained by The Pensions Regulator.

2. Workplace pension reforms (automatic enrolment)

The Pensions Act 2008 and Pensions Act 2011 laid the foundations for a fundamental reform of workplace pensions, requiring every employer to automatically enrol all eligible workers into a qualifying pension scheme and to contribute to their pensions. The changes were introduced in stages from October 2012, starting with the largest employers. Employees will be able to opt out of their employer’s scheme if they choose not to participate but, if they are still eligible, they will be re-enrolled after a 3 year period.

An eligible worker is:

  • someone who is not already in a qualifying pension scheme

  • is aged 22 or over

  • is under state pension age

  • earns more than £10,000 a year

  • works (or usually works) in the UK

Minimum levels for employer and employee contributions will be phased in over the period to 2019. The minimum contribution levels vary depending upon the scheme’s definition of pensionable pay (see the “Certification” section in the Pension Regulator’s guidance for pension schemes under the new employer duties). In the case of a scheme where pensionable pay is equal to qualifying earnings (explained in paragraph 50 of the guidance), the minimum level of contributions are as follows (expressed as a proportion of the jobholder’s qualifying earnings):

  • between October 2012 and March 2018, defined contribution (DC) schemes or personal pensions require a minimum contribution of at least 2%, with at least 1% coming from the employer and 0.2% from tax relief

  • between April 2018 to March 2019, the minimum contribution will be 5%, with at least 2% coming from the employer and 0.6% from tax relief

  • from April 2019, it will be 8%, with at least 3% coming from the employer and 1% from tax relief

These dates are taken from Appendix A of the Pension Regulator’s guidance.

The releases Employees Eligible for Automatic Enrolment: Contributions to Workplace Pensions, 2005–2014 and Workplace pension participation and saving trends: 2004 to 2014 give further information on the workplace pension reforms.

3. Definitions

Annuity: A financial instrument provided by an insurance company that pays a guaranteed annual income to the holder, typically until death.

Career average scheme: Career average revalued earnings (CARE) or “career average” schemes are a form of defined benefit scheme which use average earnings over the whole career rather than final earnings to calculate the pension. Pension entitlements earned each year are revalued (increased) during the member’s working life in line with prices or earnings.

Contracting 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 National Insurance contributions are reduced or partially rebated. Members of a contracted out pension scheme obtain rights in the pension scheme in place of rights to an additional state pension. From April 2012, the option to contract out only applies to defined benefit (DB) schemes. With the introduction of the new state pension (for those reaching state pension age on or after 6 April 2016), contracting out for DB schemes will also end. Information on contracting out from DB schemes is presented in the OPSS datasets.

Defined benefit (DB): A pension in which the rules of the scheme specify the rate of benefits to be paid. Examples include “final salary” and “career average” schemes. In a final salary scheme, benefits are based on the number of years of pensionable service, the accrual rate, and the salary in the final year or years prior to retirement.

Defined contribution (DC): A pension in which the benefits are determined by the contributions paid, the investment return on those contributions (less charges) and the type of retirement income product purchased upon retirement. It is also known as a money purchase pension.

Dependant: A person who depends financially on the pension scheme member, or did so at the time of the member’s death or retirement.

Group personal pension: An arrangement facilitated by an employer or group of employers for their employees 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.

Membership types: A member is a person who has been admitted to membership of a pension scheme and is entitled to benefits under the scheme whether now or in the future.

  • Active members are current employees who would normally contribute to the pension scheme (or have contributions made on their behalf).

  • Pensioner members are members who are receiving pension payments from the scheme, their dependants and pension credit members (former spouses who have gained rights as a result of a pension credit following pension sharing on divorce). In some cases pensioner members may be in receipt of a pension from the scheme but still be working for the employer.

  • Deferred members (those with preserved pension entitlements), are former employees who have accrued rights or assets in the scheme that will come into payment at normal pension age but who are no longer actively contributing (or having contributions paid on their behalf) into the scheme. Deferred members also include dependants, pension credit members and those still working for the employer.

Individuals may have more than 1 of the above types of membership. For instance, they may be a member of their current employer’s pension scheme as well as having preserved entitlements in a previous employer’s scheme. Hence, all estimates of membership in this release are not counts of individuals.

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 – they are set up as a trust with 1 or more trustees who have responsibilities to run the scheme according to the scheme rules and ensure members’ benefits are secure. For occupational schemes in the public sector, the same role is performed, for example, in the Local Government Pension Scheme, by a pension committee. Occupational pension schemes are a form of workplace pension.

Pension credit member: the former spouse of a pension scheme member who is given a credit in respect of any pension benefits arising on divorce.

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. Alternatively, they may be facilitated by an employer (known as group personal pensions). Personal pensions (which include stakeholder and self-invested personal pensions – see Pension Trends glossary) are a form of defined contribution pension.

Private sector schemes: Schemes covering the part of the economy consisting of individuals, firms and other institutions. The private sector includes state-owned enterprises and other public corporations with outputs paid for by individuals directly rather than through taxation. The pension schemes of the Lloyds Banking Group, the Royal Bank of Scotland Group and HBOS plc are classified as belonging to the private sector.

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.

Scheme sections: Some schemes have more than 1 section, offering benefits on various bases to different groups of members. For example, 1 group of members might be offered benefits on a defined benefit basis, while a second group might be offered benefits on a defined contribution basis. Alternatively, schemes might have different sections in order to offer different levels of the same type of benefit to different members or simply to account for the benefits and contributions of different groups of members separately. The OPSS provides selected schemes with forms to complete for each section separately; further information on data collection is given in the OPSS Quality and methodology information (QMI) report.

Scheme status: An occupational pension scheme may be open, closed, frozen or in the process of winding up.

  • An open scheme admits new members.

  • A closed scheme does not admit new members but may continue to receive contributions from or on behalf of existing members who continue to accrue pension rights.

  • Frozen or “paid up” schemes, continue to pay benefits to existing members but no new members are admitted and no further benefits accrue to existing members (except in defined contribution schemes where the existing pot may continue to accrue investment income). Members can make no more contributions but further employer contributions may be made (and in a defined benefit scheme, may have to be made to correct a deficit).

  • Winding up is where the scheme is in the process of termination, either by buying annuities for the beneficiaries or by transferring assets and liabilities to another scheme or to the Pension Protection Fund. In general there are no active members in schemes that are frozen or winding up, as members of such schemes can no longer accrue benefits.

Further definitions are available in the Pension Trends glossary.

4. Statistical significance

Statistical significance is an expression that says whether an estimated value is likely to have arisen only from variations in the sampling. It is most often used for changes where a “significant” change is one that is not likely to be only due to the sampling and therefore likely to be due to a real change.

5. Usage of pension statistics

The information we produce is designed and produced in consultation with users to ensure that it is relevant and meets users’ needs. A users of ONS pension statistics paper, that outlines some of the different ways members of the public and stakeholders make use of pension statistics and the types of decisions they inform, is available.

6. Government Statistical Service business statistics

To find out about other official business statistics, and choose the right data for your needs, use the GSS Business Statistics Interactive User Guide. By selecting your topics of interest, the tool will pinpoint publications that should be of interest to you and provide you with links to more detailed information and the relevant statistical releases. It also offers guidance on which statistics are appropriate for different uses.

7. Discussing ONS business statistics online

There is a Business and Trade Statistics community on the StatsUserNet website. StatsUserNet is the Royal Statistical Society’s interactive site for users of official statistics. The community objectives are to promote dialogue and share information between users and producers of official business and trade statistics about the structure, content and performance of businesses within the UK. Anyone can join the discussions by registering via either of the links above.

8. Code of Practice for Official Statistics

Details of the policy governing the release of new data are available by visiting the UK Statistics Authority website.

9. Scheme numbers

Estimates for the number of occupational pension schemes have now been withdrawn from publication.

The values have always been weaker than other OPSS figures as the survey is designed primarily to measure membership. While a review in 2011 improved the methodology for weighting estimates of scheme numbers, the problem of sampling variability was not resolved and concerns remain around the usability and quality of these figures.

Information on scheme numbers can, however, be found in the Pension Regulator's Purple Book (for defined benefit schemes) and their DC trust release (for defined contribution occupational schemes).

If you have any queries on this, please contact us via email: opss@ons.gsi.gov.uk or telephone Hazel Clarke on +44 (0)1633 455633.

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Contact details for this Statistical bulletin

Hazel Clarke/Fred Norris
opss@ons.gsi.gov.uk
Telephone: +44 (0)1633 455633