Context

UK pensions include the State Pension and private pensions. The Pensions Dashboards Programme wanted to understand the numbers and types of private pensions held by the British population.

Pensions were defined for the purposes of this study as private pensions not currently in payment. These comprised workplace pension schemes, which have been subject to automatic enrolment in the UK since 2012, and personal pension schemes, which are set up by an individual directly with a pension provider.

The study

The Pensions Dashboard Programme commissioned Ipsos to undertake secondary analysis of the Wealth and Assets Survey to identify the characteristics of individuals with different numbers and types of pensions.

The Wealth and Assets Survey is a major, nationally representative longitudinal survey of households and individuals in Great Britain run biennially by the Office for National Statistics. It has a detailed questionnaire with comprehensive coverage of the financial wellbeing of individuals and households including their financial, physical, property and pensions assets and debts.

The analysis reported here used three waves of the data (2014-2016, 2016-2018, and 2018-2020) to report the trends around the changing pension landscape in Britain. It included all adults aged 16 and over, except those aged 16 to 18 who were in full-time education.

Key findings

• In 2018-20, 57% of adults aged 16 and over in Great Britain had at least one pension that was not in payment. This represented an increase by 11 percentage points from 2014-16.
  • This increase was greatest for younger age groups (16-34) and those with lower personal incomes (£10,000-£30,000p.a), most likely due to automatic enrolment.
• Among adults with at least one pension not currently in payment in 2018-20:
  • 63% had one pension, 23% had two and 14% had three or more.
  • The mean number was 1.6. This was highest for 45-54-year-olds (1.9).
  • 49% had Defined Contribution pensions only (an increase from 20% in 2014-16), 36% had Defined Benefit pensions only, and 16% had both.
  • 54% had active pensions only, 21% had deferred pensions only, and 25% had both.
• ·The number of pensions not in payment increased by around one-third from 2014-16 to 2018-20. In 2018-20:
  • 68% were held by those aged 25-54.
  • 51% were held by those with personal incomes between £20,000 to £74,999.

Points to consider

Methodological strengths or limitations

• Figures in the report were based on original analysis by Ipsos and subsequent calculations by the Pensions Dashboard Programme.
• Although the Wealth and Assets Survey is longitudinal, the analysis undertaken was apparently cross-sectional.
• The analysis was descriptive. Although the data were weighted to ensure representativeness of the GB adult population, confidence intervals were not calculated and reported differences were not tested for statistical significance.
• The Wealth and Assets Survey sets caps on the number of products it collects detailed information about. This will tend to have suppressed the estimates reported here, but not substantially.

Applicability

• The findings should be of interest to policymakers, providers, employers and other stakeholders with an interest in private pension trends.