Posted on February 29th, 2012 | Categories - News
The number of employees who are members of a work place pension has fallen below 50% for the first time.
Figures from the Office for National Statistics (ONS) show that approximately 48% of employees are now in work place pension schemes, down from 55% in 1997 when records began.
The ONS figures reveal a huge difference in take up rates between the private and public sector.
83% of employees in the public sector are members of their employer’s pension scheme, compared to just a third in the private sector.
The research also found that older workers were more likely to be members of pension schemes than their younger colleagues.
Pension experts believe that the fall in membership is due to a number of factors, including the demise of Final Salary and Defined Benefit pensions in the private sector, poor fund performance, changes to pension legislation and of course the economic crisis which has squeezed household budgets.
Reacting to the figures, Pensions minister Steve Webb said: “These figures lay bare the scale of the challenge we are facing. With only 33% of people working in the private sector saving in a workplace pension, we must take action to prevent a pension crisis. “
He continued: “Our workplace pensions reforms will set millions on the path to a more prosperous retirement and close the pensions gap between private and public sector workers.”
Industry experts hope that the government’s Auto Enrolment plans, which will see most employees, who are not already members of a pension scheme, automatically enrolled into a pension will help address the crisis.
Darren Philp, Policy Director at the National Association of Pension Funds, said: “Upcoming reforms to automatically put all workers into a pension will be a huge help in tackling the UK’s savings crisis, especially in the private sector. The reforms could bring between five and nine million people into a pension, including younger people and many part-time workers.”
Brendan Barber, Secretary General of the TUC, agrees: “These figures also underline the importance of auto enrolment into pension schemes. Ministers should rebuff any more attempts from business lobbyists to water it down.”