Workplace pensions in the UK present a sorry picture of decline, reveals 2009 a data study published by the Office for National Statistics (ONO). Of particular concern is that in recent years defined contribution (DC) pension provision has joined the long-term decline in defined benefit (DB) pension provision.
Overall, the ONS study shows that 35% of private sector employees were in a workplace pension scheme at the end of 2009, down from 45% in 1999.
Of the total, 12% were in a DB scheme at the end of 2009, down from 14% a year earlier and 30% in 1999. Notably, ONS data reflects that 80% of public sector employees were active members of DB schemes in 2009.
On the DC scheme front, after a period of steady growth which saw the proportion of employees in DC schemes rise from 11.9% in 1999 to 24.9% in 2006, the proportion in all the subsequent years fell to reach 23.1% at the end of 2009.
Mark Duke, senior consultant at consultancy Towers Watson, said: “This has been a decade of decline for private sector pension provision. The government intends to force employers to put their staff into pension schemes automatically, but has twice delayed these reforms because it loses tax revenue when people save for retirement.”
Duke was referring to the Pensions Act of 2008 which requires employers to enrol staff into a pension scheme with a minimum level of employer contributions. The government, noted Towers Watson, now proposes to extend this duty to all employers over four years – between October 2012 and September 2016 – having originally said this process would take between 12 and 18 months. Minimum default contribution rates will not be fully phased in before October 2017.
The demise of DB schemes and the impact of the recession on the UK’s economy has produced a significant change in employee attitudes towards financial planning, reveals a Towers Watson study. A survey conducted between November 2009 and January 2010, by the consultancy that employees are recognising they must assume greater responsibility for their own retirement savings.
Towers Watson found 68% of employees believe they are personally responsible for providing for their own retirement income needs, with18% saying the responsibility lies with their employer and 15% saying it rests with the government.
Looking ahead over the next five years, 75% saying it will be primarily their personal responsibility with those suggesting their employer is responsible reduced to 15% and those citing the government to 10%.
Some 37% said they are comfortable with the responsibility, 28% are not and 34% are uncertain.