UK - Almost three-quarters of occupational defined contribution (DC) members are saving "adequately", according to UK insurer Scottish Widows, however employers are gradually reducing their contributions and leaving employees to make up the shortfall.

Findings from the Scottish Widows UK Pensions Report June 2009 showed the number of pension holders confident that defined benefit (DB) schemes will provide the primary source of income at retirement rose just a fraction from 40% to 41%.

The figures showed 44% of men and 36% of women see DB as the main source of pension provision, compared to 42% and 37% in 2008, despite the fact that most private sector DB schemes have closed to new entrants. 

As the shift from DB to DC continues, the survey of over 5,000 adults revealed average contributions to DC pensions are increasing among most age groups - a move which Scottish Widows suggested could reflect awareness by individuals of the value of an occupational scheme, or of larger employers with more generous contribution rates switching from DB to DC.

The report noted employees with access to a pension are saving an average of 11.2%, however this increases to 17% in DC schemes where members and/or employers make contributions.

Scottish Widows noted that 71% of DC members are "saving adequately", but it highlighted a "subtle continuing shift away from employer to employee contributions" as  employer contributions as a percentage of salary in occupational DC schemes fell from 6.6% to 6.4% between 2008 and 2009, while employee contributions rose from £129 (€151) to £135 a month.

That said, the findings also revealed 20% of people with an occupational DC scheme do not make any contributions at all, while 27% do not know how much they save into a DC scheme and 31% are unaware of the type of pension arrangement they have in place.

The survey showed an employer pension scheme acts as a major employment incentive for pension saving for 34% of over-50s and 18% of under-30s, while 47% of all workers claim the quality of the pension scheme is a factor for switching jobs.

In particular, 54% said the workplace pension was an incentive to stay with their current employer and 37% claimed they would seriously consider seeking another job if their employer reduced pension contributions.

The report noted "while employers continue to make a major impact towards an adequate pension, the trends do not look promising for individual savers", as it warned the widespread disengagement suggests members are "unlikely to know how much responsibility they bear in deciding how much they should be saving or how much risk they should take when investing those savings".

Figures suggested while 49% are confident their DB schemes will deliver the expected income in retirement, this falls to just 16% for members of DC schemes, as one-third blamed the lack of confidence in the performance of equity markets, while 47% expect the recession to affect the size of their pension.

Ian Naismith, head of pensions market development at Scottish Widows, said: "Contributions to employer-sponsored DC schemes have increased, especially amongst higher earners. With many employers closing DB schemes, they may be contributing more than the average to DC schemes."

But he warned there is "still more that needs to be done from both the government and the industry to better encourage pension savings for the long term, particularly in the current economic environment. With 19% of those that should be saving putting aside nothing at all there is still a big challenge ahead".

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