Recent research, commissioned by AXA, showed that 64 percent of people will use only the state pension to support themselves in retirement, largely due to the demise of occupational pension schemes.

So what does the future hold for occupational pension schemes?

Pension Planning: Occupational Pension Schemes

The number of active members in occupational schemes shows an alarming decline in occupational pension schemes with 10.7 million active members in 1991 slipping to just 8.8 million active members in 2007. At this time two-thirds of the current working population is not engaged in any form of occupational pension scheme. Read More: State Pension Poverty Trap

While many believe Personal Accounts may improve this picture from 2012 with full implementation in 2016, there remains a large amount of uncertainty around their implementation and potential impact.

“The erosion of the once sound company pensions infrastructure in the UK, which supported the retirement needs of the working population over much of the 20th century presents a future government with a massive challenge,” said Steve Folkard, Head of Savings and Pensions Policy at AXA.

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Pension Planning

“Pensioner poverty is set to grow dramatically over the coming years and current reform measures will take years to implement. We risk heading past the point of no return for many people in this country who may be left living on the very minimum in retirement.”

The Pensions Policy Institute estimates that the introduction of auto-enrolment into workplace pensions and the continued shift by employers from Defined Benefit to Defined Contribution pensions in the private sector mean that by 2020 there could be an additional 10 million savers in DC pensions, however, AXA’s research shows that just 19% of people are likely to take part in the automatically enrolled scheme.

In light of the continued decline in occupational pension membership, AXA estimates that by 2020, there could be a rise of just 800,000 members in occupational pension schemes, far from the 10million private member estimations. The lack of political consensus coupled with the ongoing economic situation may yet require a further rethink of future pension reforms.

Figures from ONS show that in 2007, the estimated total number of occupational pension schemes in the UK was 54,110 - only 56 percent of the total in 2004.  Whilst such a drop should always be treated with caution the General Household survey GB also found a worrying gradual decline.

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