ONS data shows membership of occupational pension schemes at lowest level since 1950s
The number of people contributing to an occupational pension has fallen to the lowest level since the 1950s, according to research published by the Office for National Statistics.
In 2010 there were 8.3 million people saving into an occupational pension ? 3 million in the private sector and 5.3 million in the public sector. This is the lowest number since 1956 when 8 million contributed to an occupation pension scheme, and down 3.9 million from the peak of 12.2m in 1967.
Although there has been a slight decline in the number of public sector pension scheme members in the last two years, the biggest decrease is in members of private sector defined benefit (or final salary) schemes since 1991.
Thousands of private sector final salary schemes have closed to new members in the last 10 years according to the National Association of Pension Funds, resulting in falling numbers of active members as people retire. Less than one in five final salary schemes is open to both new and existing members.
Dave Prentis, general secretary of the trade union Unison, said while the survey showed just how few private sector workers are saving for their retirement, top bosses in the private sector "award themselves generous pensions with low retirement ages, but shut their schemes to staff leaving them facing poverty in their later years, with the only lifeline ? means tested benefits".
He added that the poor private sector figures were being used to attack pensions rights in the public sector, and would spark a race to the bottom, "with poverty in retirement for all being the ultimate destination".
Recent years have seen many firms switch from final salary to defined contribution (otherwise known as money purchase) pension schemes.
Contribution rates ? the percentage of gross salary that is paid into a pension ? are much lower for defined contribution schemes.While the average defined benefit rate in 2010 was 5.1% for employees and 15.8% for employers, the average rate for defined contribution schemes was 2.7% for employees and 6.2% for employers.
The ONS has calculated that contribution rates would fall to about 12% for employers and rise to just under 6% for employees in a career average scheme ? the structure proposed by the government for public sector schemes.
Joanne Segars, NAPF's chief executive, added: "The exodus is especially noticeable in the private sector, where confidence in pensions is running at a record low. People are being put off by stock market turmoil, falling annuities, and mistrust of the pensions industry's fees and charges.
"While it's understandable that spending gets prioritised during difficult times, it's essential that people don't forget about their retirement. The UK is on a collision course with its own old age. People are living almost a decade longer than they were in the mid-1950s, but they simply are not saving enough for their old age."
While private provision for retirement is in decline, a second ONS survey on the state pension found that reforms will improve benefits in the long term, particularly for women.
The changes, which include reducing the number of qualifying years to 30 (from 44 for men and 39 for women), and the introduction of carer credits for those stopping work to care for children or other relatives, will result in 95% of women who reach the state retirement age in 2030 receiving the full basic pension.
This is nearly double the amount of women ? 48% ? who received the full basic state pension in September 2010. In contrast, 87% of men received a full basic state pension.
Source: http://www.guardian.co.uk/money/2011/oct/27/pensions-50-year-low
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