Company Pensions at All-Time Low
The UK is heading for a “pensions time bomb” with the number of employees contributing to a company pension scheme, now at its lowest level since the 1950s, according to new Government figures.
Around 8m employees are currently paying into their company pension scheme, according to the Office of National Statistics – and more than 5m of these are in public sector pensions.
In the private sector just 3m workers contribute to company pensions schemes – half the number that were members 20 years ago, and significantly less than the 4.3m private sector employees who were members of such schemes in 1956.
In contrast, the number of people who are members of public sector pensions has risen over this period – from 3.7m members in 1956 to over 5m member last year.
These figures are a reflection of how pension provision in the private sector has changed. Previously most firms offered gold-plated “defined benefit” pensions, where retirement income is based on earnings. These schemes are still common place in the public sector. But today, the vast majority of private firms offer riskier stock market-linked pensions, and will typically invest far less money into these scheme on behalf of their workforce.
Twenty years ago, on average people could expect to spend around 10 years in retirement, but that figure has now more than doubled to 22 years with no increase in provision.
If you are thinking of starting a new pension, or making changes to an existing company pension, please contact AccountsNet, where we can put you in touch with one of our partner advisers.