Pensions - Articles - Comment on ONS Financial Survey of Pension Schemes results

Kate Smith, head of pensions at Aegon comments on the ONS 2019 results from its new Financial Survey of Pension Schemes which was redeveloped last year and collects data online from occupational pension schemes in the UK from April 2019. Results include employer and employee contributions, benefits, transfers, assets and liabilities.

 “The ONS survey once again shows the impact of auto-enrolment on the pensions landscape. Membership of defined contribution (DC) schemes continues to outstrip membership of funded defined benefits (DB) schemes in the public and private sectors, with 22.4 million DC members compared to 18.3 million DB members.

 “Auto-enrolment continues to make a positive impact on the employee contributions with nearly two-thirds of employee contributions being paid into DC schemes in Q4 2019, with most active members being in DC schemes.

 “Employers are making the lion’s share of pensions contributions to both DC and DB schemes, which is partly due to the use of salary sacrifice with the majority of schemes using this at least partially if not in full.

 “However, DB schemes continue to account for most of employer contributions, with over 70% of employer contributions paid into DB schemes in Q4 2019. The past continues to haunt employers sponsoring DB schemes, with 62% of their DB contributions going towards paying benefits built up in the past in the form of deficit recovery contributions.

 “At the end of 2019, £2.2 trillion was invested in pension funds, with the vast majority held in DB schemes. This statistic shows just how important pensions are not only to people saving for later life, but also a substantial part of the UK economy.

 “Although the figures show an encouraging picture of workplace pension saving, future figures are likely to look very different as the financial and economic impacts of the coronavirus crisis take hold. Some employers with generous contributions are already looking to cut back to auto-enrolment minimum rates, either temporarily or permanently, and we may see more of this as the economic crisis begins to deepen. We could also see an increase in employees opting out of schemes to ease financial struggles, while others will lose their jobs and, with it, access to a workplace pension.”

 ONS Financial Survey of Pension Schemes

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