One million active members contribute to trust-based defined contribution (DC) pension schemes in the private sector, while more than two million that contribute to defined benefit (DB) pension schemes.
A snapshot of the trust-based DC pensions landscape, DC Trust: A presentation of scheme return data, published by The Pensions Regulator, also found annual contributions to schemes with 12 or more members amount to approximately £2.2 billion or £4,200 per active member. Two-thirds (75%) of these contributions come from employers.
There are relatively few providers operating a DC master trust multi-employer scheme, and memberships are currently relatively low. However, 75% of the 82,000 employers which offer staff membership to a DC trust-based scheme do so via a master trust.
Most trust-based DC schemes (44,000 of 48,000) are very small, with less than 12 members, but these account for just 5% of memberships.
A majority (84%) of the 650 schemes which entered wind up between 2005 and 2008 inclusive are now wound up. Only 70% of the 450 schemes which entered wind up between 1997 and 2004 are now wound up.
Bill Galvin, chief executive of The Pensions Regulator, said: “Our 2010 analysis sets out the enormous range and variety of DC trust-based schemes.
“130 large schemes dominate the current landscape, accounting for half of all memberships. However, the majority of schemes in the DC trust-based landscape still are very small.
“Over 60,000 small employers offer membership of a master trust arrangement. Large schemes have potential to deliver good outcomes for members. They have the resources to offer high standards of governance and administration and low costs.”
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