LONDON (Reuters) — Less than one-half of employees in the United Kingdom are now saving into a workplace pension scheme, the lowest proportion since records began in 1997 driven by a fall in membership of final salary schemes, official figures show.
The Office for National Statistics (ONS) said 48 per cent of employees were saving into a scheme in 2011, the first time the figure has fallen below 50 per cent.
There was a sharp difference between the public sector, where 83 per cent of workers were enrolled in their employer's scheme, compared with 33 per cent in the private sector.
"We've passed an important and worrying landmark," said Darren Philp, policy director at the National Association of Pension Funds (NAPF). "Sadly, the fall in people saving into a final salary scheme has not been fully matched by interest in other types of pension."
Workers with final salary schemes, in which payouts are pre-determined using a formula based on salary and duration of employment, declined to 30 per cent in 2011 from 46 per cent in 1997. This contrasts with 79 per cent of public sector workers.
Only nine per cent of private sector employers were contributing to new final salary schemes, down from 34 per cent in 1997.
In January, oil company Shell become the last FTSE 100 company to close its final salary scheme to new members.
"Pension participation has been getting worse for some time, but we should now be approaching the nadir," said John Ball, head of U.K. pensions at consultant Towers Watson.
Auto-enrolment, under which employers will sign staff up to their corporate pension schemes unless they ask to be excluded, is due to be phased in this year.
The scheme has the potential to create up to six million additional savers and boost retirement saving by as much as 12.5 billion pounds (US$19.63 billion) per year, research by insurer Standard Life found.
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