According to information released by the Office for National Statistics (ONS) the number of company pension schemes in operation dropped in 2012 for the 11th consecutive year.
The ONS data collated just before the launch of the automatic enrolment workplace pension scheme shows that just 46% of workers in the UK now have a workplace pension, the lowest figure since 1997 when it began recording the numbers.
The number of memberships of final salary schemes continues to fall, with just 28% in operation in 2012 compared to 46% back in 1997. The decrease in final salary pensions has been felt most within the private sector, where due to their increased cost to the employer, many companies have now closed the schemes to new employees.
The figures reveal a huge difference between the private and public sector when it comes to having final salary pension schemes. In the public sector, 91% of employees with a workplace pension scheme contributed towards a final-salary pension compared to only 26% of private sector employees.
The report relates to early 2012 and the data shows that most of the final-salary pension schemes that have closed were replaced with either defined contribution pension schemes or the more risky stakeholder schemes, where pension pay outs rely on the performance of the stock market.
Again, the private sector pension take up was more in the public sector, with the ONS saying that 83% of employees in the public sector contributing towards a workplace pension last year, compared to 32% of private sector employees.
Not only was there more workers in the public sector paying into pension plans, the contributions made by both employers and workers were higher than the private sector. 94% of public sector workers with pension schemes received pension contributions from their employer of 12% or over of their wages. However, in the public sector, 61% of workers in a pension schemes received employer contributions of 10% or less of their salaries.
There were higher contributions from employees in the public sector with 37% of workers contributing over 7% of salaries, compared to 15% of private sector workers.
Steve Webb, the pensions minister was quick to address the data, he said: “The scale of the challenge is clear – too few people are saving for their retirement, which is why our pension reforms are so crucial.
“Last year we acted to make sure all workers will have access to a workplace pension. Firms employing over a million people have already started enrolling their employees into pensions, finally reversing the downward trend.”