96% of UK DC funds offer investment choice
UK - Latest figures from the Office for National Statistics (ONS) have revealed that over 90% of active members of defined contributions are offered a choice as to how they invest their money.
Findings from the Occupational Pension Schemes Survey for 2008 found of the 96% that were offered a choice, four-fifths had the option of choosing from five or more investment funds.
The latest edition of the survey also showed the total membership of occupational pension schemes in the UK increased by one million people to an estimated 27.7 million in 2008
This comprised of approximately 15.3 million members in private sector schemes and 12.4 million members in public sector schemes. The largest increase in membership was in deferred members with preserved pension entitlements, which rose from 9.4 million people in 2007 to 9.9 million people a year later.
In contrast, the number of active members increased from 8.8 million to just nine million members, while the pensions-in-payment sector reported a slightly higher jump from 8.5 to 8.8 million people.
That said, the survey of 1,429 private sector and 239 public sector schemes showed the active membership of defined benefit (DB) schemes was "little changed" with an estimated 2.6 million members, against 2.7 million in 2007, while the level of active defined contribution members rose by just 100,000 to reach one million.
The ONS figures also found in 2008 approximately 94% of active DC members working in the private sector were in open schemes, compared to just 42% of active DB members. However, private sector final salary schemes continued to have higher regular contribution rates, with an average employer contribution of 16.6% against 6.1% in open DC schemes.
Instead, the survey showed the largest change in contribution rates in private sector schemes occurred in closed DB schemes where both employer and employee contributions increased. Figures showed employer contributions rose from 16.1% to 18.1%, while member rates jumped from 4.3% to 4.8%.
Meanwhile, employer contributions to open DB and DC schemes fell to 14.6% and 6% respectively, while open DB members also reduced contributions from 5.5% to 5.1% while the average employee contribution to open DC schemes increased from 2.6% to 3%.
Additional findings from the 2008 survey revealed that for over 80% of active scheme members the employer would continue to contribute to the employee's pension if they continued working past the normal pension age. This was set at 65 for over two-thirds of active members in private sector schemes and two-fifths of employees in public sector schemes.
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