Personal PensionJul 24 2013

ONS pension figures reveal savings gap chasm

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The ONS’s Pension Trends project revealed that just 35 per cent of men were contributing to a pension in 2011/12, with the number of female contributors even lower at 32 per cent.

The figures compared to 50 per cent of men and 36 per cent of women in 2000/01, and 54 per cent and 35 per cent respectively in 1996/97.

The total employee membership of employer sponsored pension schemes is equally gloomy, having fallen from 55.2 per cent in 1997, to 46.5 per cent last year, leaving more than half the workforce without any non-state pension provision as auto-enrolment was launched, the lowest since records began.

The project, which draws on statistics from the ONS’s own data and from a number of government departments and other organisations, aims to highlight trends in pension provision in the UK.

It also found that the number of workers who were members of a defined benefit scheme had fallen from 45.7 per cent in 1997, to just 28 per cent in 2012, the majority of which are almost exclusively in the public sector.

Of those contributing to a scheme, ONS figures revealed that the average employee contribution into a defined benefit scheme was 4.9 per cent of a worker’s salary, a figure that had fallen from 5.2 per cent in 2009.

Employees were also paying less into defined contribution schemes, with the average falling from 3.0 per cent in 2008, to 2.8 per cent in 2011, for when the most recent figures are available.

Meanwhile, the number of self-employed men belonging to a personal pension scheme has plummeted from 66 per cent in 1996/97, to just 34 per cent in 2012.

Reaction round-up

Tom McPhail, head of pensions research for Bristol-based Hargreaves Lansdown, said: “These figures illustrate dramatically how important it is that auto-enrolment succeeds over the next five years. The inevitable consequence of this level of pension funding is that millions of people will have to work on into their 70s.

John Fox, managing director of Liberty Sipp, said: “Auto-enrolment is coming and what’s clear from this disturbing data is that it couldn’t come soon enough. Few will deny that if things carry on as they are, we will be faced with a pensions catastrophe.”

Steve Lowe, director of provider Just Retirement, said: “People are still contributing far too little of their salary to pension savings, and often we are seeing that those who do save are not getting the best deal when it comes to turning savings into income.”