5.1 Investing for a pension
A central and vital part of investment activity relates to investing in pension schemes to produce an income stream in retirement. How does the UK fare when it comes to this vital activity?
Table 1 sets out the percentages of adults in the UK who were active members of pension schemes in 2012/13. The data, compiled by the Department of Work and Pensions (DWP), does not provide an overall picture, since the numbers will not include those who were members of schemes but have deferred receipt of pension benefits. The data also excludes those who have retired already and who are drawing pension income. Additionally the data does not reflect those that are simply investing in assets outside a formal pension scheme to provide for their retirement.
| Scheme | Males | Females | All adults |
| Employer-sponsored schemes | |||
| Occupational scheme | 14 | 15 | 15 |
| Group personal scheme | 5 | 5 | 5 |
| Group stakeholder scheme | 2 | 2 | 2 |
| All employer sponsored schemes (1) | 22 | 22 | 22 |
| Non-employer-sponsored schemes | |||
| Personal pension scheme | 6 | 3 | 4 |
| Stakeholder pension scheme | - | - | - |
| All pension participation | 28 | 24 | 26 |
Footnotes
(1) Includes pensions where pension type is unknownNotwithstanding these limitations, the data points to a worrying conclusion – that a significant proportion of adults are not making their own provisions for retirement and may, as a consequence, become entirely reliant on their state pension when they do retire.
Also worrying is the fact that the survey by the DWP shows that the proportion of adults who are pension fund members has fallen – albeit slightly – in recent years. This may, in part, be ascribed to the impact of falling real incomes since the financial crisis of 2007/08. Many households – particularly young adult households – are struggling to meet month-to-month expenditure needs and have limited scope to invest funds in pension schemes.
The closure, at least to new members, of many company schemes in recent years is also likely to have had an impact on scheme membership.
The data was collected at the same time as the roll-out of automatic enrolment onto workplace pension schemes. This requires medium and larger sized companies to make pension schemes available for their staff. All eligible employees are automatically enrolled onto these schemes unless they take action to ‘opt-out’. This development is helping to boost numbers enrolled on pension schemes and the extension of the initiative to all companies by 2017 will help boost numbers further.