DC memberships surpass DB for first time

Graham Vidler, director of external affairs at the NAPF, said:

"The decline of defined benefit has been well documented as schemes have gradually closed to new members and new contributions from existing members. This year’s survey shows that trend continuing with 39% of DB schemes fully closed compared to 34% last year.

"That said, DB schemes are still very much the dominant investment force in UK workplace pensions, with our survey showing on average £2.3bn of assets in private sector DB pensions schemes and £0.25bn in DC pension schemes in 2014."

The survey found that 50% of DB schemes remain open to future accrual, but only 8% of private sector DB schemes are open to new members compared to 12% in 2013.

In addition, trust-based DC schemes that responded to the survey had 15,000 active members, compared to just 4,500 active members in the average DB scheme.

However, the average contribution rate for DC members continued its descent, down to 11.7%, from 12.5% in 2013.

This consisted of 7.6% from the employer and 4.1% from the employee. NAPF attributed this fall in contributions to the “sheer volume” of new savers joining schemes as a result of auto-enrolment, where contributions are started at the minimum rate.

Vidler added:

"In 40 years – less than a working lifetime – we’ve seen massive changes in the pension landscape. Two-tiers station pensions have been introduced, radically reformed and then abolished. Contracting out was in – and now is out. Scheme memberships was compulsory, the voluntary and now automatic. Stakeholder pensions and annuities both became a significant part of mass market retirement provides and both are now in decline."