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The changing landscape of pension schemes in the private sector in the UK
Private sector pension provision in the UK has been changing over the last forty years. Defined Benefit pension schemes have been in decline since the late 1960s. By contrast, Defined Contribution pension schemes have experienced growth, both in terms of membership and assets under management, particularly since the late 1980s.
This report, commissioned by MetLife Assurance Limited, brings together the latest data on the state of private pensions in the UK. The report examines the main factors that have played a role in shaping recent trends in private sector pension provision. It also highlights how employers are responding to the challenges of providing workplace pensions and considers the future of pensions in the private sector in the UK.
Chapter one analyses the current pension landscape in the private sector using data from a variety of Government sources and industry-wide publications. The chapter highlights how pension provision has changed in the private sector over the years in terms of membership and the type of pension provided.
Chapter two discusses the challenges that have affected pension schemes in the private sector. The chapter examines the impact of longevity, investment returns, inflation,sponsor default risk, changes in regulation and legislation and broader social factors on the provision of DB pensions in the private sector.
Chapter three illustrates the different strategies that employers and trustees have been adopting in response to the challenges in pension provision. These strategies range from improving the scheme funding position, changing benefit structures, changing investment strategy to transferring risks to insurers.
Chapter four discusses the future of private sector pension provision in light of policy changes such as the introduction of automatic enrolment; further state pension reform and the potential introduction of ‘Defined Ambition’ pensions.
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