The analysis of official private sector pensions statistics, published on the eve of the Congress debate on pensions, has revealed that the proportion of the working population in the private sector who were members of defined contribution benefit scheme fell by 5.1%, from 18.6% to 13.5% between 2005 and 2008.

As a result, according to data from the Trades Union Congress (TUC), – which is holding its annual congress in Liverpool this week-, the proportion of the UK’s private sector workforce without any employer-funded pension scheme has been rising steadily every year from 54.6 per cent in 2000 to 62.6 per cent in 2008.

The defined contribution (DC) schemes are not growing fast enough to cover the gap left by the continuing closure of defined benefit (DB) schemes. As a result, two-thirds of the private sector workforce is being left without a pension.

This survey also reveals that less than half of DC schemes have employer contributions greater than 8%, which means there are still more people in private sector pensions building up a decent pension through a DB scheme than through a DC scheme.

Nevertheless the TUC highlighted that according to most experts, a decent pension that begins to be comparable to that offered by DB schemes requires the combined employer and employee contributions of 15% of salary.

General Secretary TUC Brendan Barber declared: “Many seem to think that the hole left by the closure of private sector salary-related pension schemes is being plugged to some extent by new money-purchase DC schemes, albeit of lower quality. But these figures show that this is not true.”

From 2012, every employer will have to auto-enrol staff in a pension and make a contribution.
But the general secretary warned: “People should not think that the 2012 contribution levels will build up the kind of pension that most expect,”