Half of employees in the private sector received employer contributions of less than 8percent of employees’ pensionable earnings, compared with 3 percentin the public sector. Nearly half – 49percent – of employees in the public sector and only 12 percentof those in the private sector received employer contributions between 12 percentand 15 percentof employees’ pensionable earnings.
The declinein the proportion of employees with a workplace pension was mainly driven by the fall in membership of defined benefit occupational pension schemes, from 46 percent to 28 percent.
There was a significant difference in take-up in the public and private sectors, with 83 percent of public sector employees members of a work place pension scheme, compared to only 32 percent of private sector employees.
Workplace pensions differs between the public and private sectors, with 91 percent of public sector employees in a defined benefit pension, but only 26 per cent of private sector employees in pensions were in defined benefit schemes.
The figures also revealed 69 percent of employees with group personal or stakeholder pensions received contributions of less then 8 percent of their pensionable earnings, compared with 42 percent of those with trust-based defined contribution pensions and 5 percent of those with defined benefit pensions.
The proportion of employees with defined benefit pensions continues to fall. In 2012, 28 percent of employees had this type of pension, compared to over 46 percent in 1997.
National Association of Pension Funds chief executive Joanne Segars says: ”It is unnerving and unsustainable that only a third of the private sector workforce is saving into a pension. This is storing up huge problems for our society. People simply will not be able to retire in comfort, and will lean more heavily on the state. Millions will be automatically put into a pension in the coming years, so the only way is up. Auto-enrolment is a great opportunity to turn the situation around and get more people saving for their retirement.”
TUC general secretary Frances O’Grady says: ”While auto-enrolment will help more people to save into pension schemes, we still need staff and their employers to contribute more towards their retirement. Today’s news about contribution rates provides yet more evidence that strong pension scheme governance and higher saving rates go hand in hand. That’s why the TUC wants to see more employers taking up trust-based pension schemes.”
