UK Workplace Pension Membership Hits New High

Active membership of DC plans rise, as membership in DB plans falls.

According to the UK’s Office for National Statistics’ annual Occupational Pension Schemes Survey, total membership of occupational pensions in the UK rose to an estimated 41.1 million in 2017, from 39.2 million in 2016. to its highest level ever recorded by the survey. Total membership of UK public sector pension plans was 15.5 million in 2017, up from 14.8 million the previous year.

Active membership of occupational pension schemes was 15.1 million in 2017, 8.8 million of which was from the private sector, with the remaining 6.3 million from the public sector. And active membership of private sector defined contribution plans was 7.7 million in 2017, compared with 6.4 million in 2016.

The survey covered UK-registered private and public sector occupational pension plans, and collected information about plan membership, benefits, and contributions from a sample of occupational trust-based pension plans consisting of two or more members. It also included plans that are winding up. The survey does not cover state pensions or personal pensions.

According to the survey, active membership has increased in five consecutive years, and grew to 15.1 million in 2017 from 13.5 million in 2016. The ONS attributed the increase to the impact of automatic enrollment. Automatic enrollment is a UK government initiative that makes it mandatory for employers to automatically enroll their eligible workers in a pension plan, and pay contributions toward it.  Deliberately failing to enroll eligible workers in a pension is a criminal offense, and can result in prosecution, according to UK pensions watchdog The Pensions Regulator.

Active membership in the private sector increased to 8.8 million from 7.7 million between 2016 and 2017, said the ONS. It also said the increase in active membership of public sector plans to 6.3 million from 5.7 million can be attributed in part to reforms made to the Teachers’ Pension Scheme, introduced in 2015.

Workplace pensions consist of occupational and group personal pensions with membership of occupational plans accounting for approximately 70% of workplace pension membership in 2017.

The survey also found that since the introduction of workplace pension reforms in 2012, the most significant movement was seen in private sector defined contribution pension plans, whose membership has increased nearly eight-fold to 7.7 million in 2017 from 1 million in 2012.

The ONS attributed the increase in membership of DC plans to the workplace pension reforms, and the fact that they are more attractive to employers because the members bear the investment risk, unlike defined benefit plans where the employer takes on the investment risk, and must pay out pensions at an agreed rate.

As a result, active membership of private sector defined benefit plans fell to 1.1 million in 2017, from 1.3 million in 2016. The report said the decline in active membership of defined benefit plans in recent years is linked to the rising costs of providing the pensions.

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