There were 2 million fewer people accruing benefits in non-government DB schemes last year than in 2000, according to the Occupational Pension Schemes Survey 2008, just published by the ONS.
Membership of defined benefit schemes amongst non-government employees fell only slightly in 2008. But there were only 1.1 million members in defined benefit schemes which accept new members, excluding employees of central government and local government.
There were an estimated 9.0 million active members of occupational pension schemes in 2008 overall, of whom 3.6 million were in the private sector and 5.4 million in the public sector. In 2008, 71 per cent of active members of private sector schemes were contracted out, says the report. Most of these were in DB schemes.
Active membership of private sector DB schemes fell from 3.0 million in 2006 to 2.6 million in 2008, while active membership of DC schemes remained stable at around one million. In 2008, only 42 per cent of active members in private sector DB schemes were in open schemes, compared with 94 per cent in defined contribution schemes. In 2008, 80 per cent of active members of occupational pension schemes belonged to schemes with 10,000 or more members, while only 1 per cent belonged to very small schemes.
In 2008, 96 per cent of active members of occupational defined contribution schemes were offered an investment choice, and nearly four fifths of these were able to choose between five funds or more. Some 0.9 million active members of DC schemes below retirement age could switch funds without charge, of whom half were allowed unlimited switching.
Rash Bhabra, head of corporate consulting at Watson Wyatt, says: “Excluding people who work for the Government, only about one job in every 10 comes with a DB pension. The seeds have been sown for that to fall to about one in 25 as existing members of closed schemes retire or move on. The question is how quickly we get there.
“The decline in membership of DB schemes has been inexorable but was also quite slow between 2007 and 2008. That’s because, a few years earlier, employers were content to close their schemes to new entrants and let staff turnover do the work. Some employers may have reached the point where the most of the members who were not going to stay long-term have already left. These figures show what was happening 18 months ago and could represent the calm before the storm.”