Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • January 2016
01

DC pension scheme membership overtakes DB for the first time

Open-access content Monday 30th January 2017 — updated 5.50pm, Wednesday 29th April 2020

There are now approximately 14.8 million memberships of defined contribution (DC) pension schemes in the private sector, compared with 11.7 million in defined benefit (DB) ones according to The Pensions Regulator.


30 JAN 2017 | CHRIS SEEKINGS
DC schemes are 'the pensions of the future' ©iStock

Its annual DC Trust report shows that this is the first time DC membership has surpassed that of DB schemes, and is believed to be due to the implementation of auto-enrolment.

DC schemes often result in less benefits for savers, and with membership now 42% higher than this time last year, and over 300% more than it was in 2009, concerns have been raised over the potential impact of lower incomes.

Aegon head of pensions, Kate Smith, said: "The latest membership numbers show clearly that a key tipping point has been passed and DC schemes are the pensions of the future, certainly in the private sector.

"As private sector DB schemes continue to decline, employers are overwhelmingly choosing DC schemes for auto-enrolment and it's important to note that DB schemes tended to be much more generous than current DC.

"For the time being the majority of those in receipt of a pension will have DB pension, but in time this will change and the lower levels of income could have a big effect on society."

The TPR report shows that there are now 34,500 DC schemes, most of which are 'micro schemes' with between 2 and 11 members, and subject to minimal legislative duties.

The biggest worry to TPR is that 360 of 750 DC schemes being used for auto-enrolment fall into this 'micro scheme' category - effectively creating two types of DC pension cover.

"Our concerns are rising about the fragmentation of DC provision and the persistence of a tail of sub-scale schemes. In our opinion, these pose an unacceptable risk to consumer protection," TPR executive director for regulatory policy, Andrew Warwick-Thompson, said.

"We strongly believe that it is unacceptable to have two classes of DC pension saver - those that benefit from the premium of scale and good governance and administration, and those that do not."

TPR have said they will announce a clear objective to raise standards of trusteeship, and will take regulatory action against those who persist in failing to meet the required level of competence.

"We recognise there are some barriers to consolidation in the DC market, such as the requirement for actuarial certificates, and so we support the government's recent call for evidence on ways of removing these barriers," Warwick-Thompson added.

This article appeared in our January 2016 issue of The Actuary .
Click here to view this issue

You may also be interested in...

'Urgent action' needed to address biggest risks to global development

Rising income equality and societal polarisation triggered by political change in 2016 could exacerbate risks worldwide if urgent action is not taken, according to the World Economic Forums’ (WEF) Global Risks Report 2017.
Wednesday 11th January 2017
Open-access content
2

Insurers lag behind other financial services in adopting digital technologies

It has been found that 58% of senior-level executives in the insurance industry believe they are behind other financial services on implementing digital technologies, according to Willis Towers Watson (WLTW).
Friday 20th January 2017
Open-access content
2

Billions worth of investment lost due to 'inadequate' telecoms infrastructure

The UK is the worst country in Europe for availability of fiber broadband to the premise (FTTP) and ranked 54th in the world for 4G coverage, potentially costing the British economy billions of pounds.
Monday 16th January 2017
Open-access content
2

Wind power generated more electricity than coal in 2016 to set new record

The UK generated more energy from wind than coal for the first time over a full calendar year in 2016, according to analysts at Carbon Brief.
Friday 6th January 2017
Open-access content

Horizon scanning

In light of political and technology changes, Richard Purcell outlines the challenges and opportunities for the profession in the coming year
Monday 6th February 2017
Open-access content
2

More than £100bn lost through investing in cash ISAs

Money invested in cash individual savings accounts (ISAs) over the last 10 years would be worth £110bn more if it had been put into multi asset funds instead, according to a report from Royal London.
Thursday 2nd February 2017
Open-access content
Filed in
01
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Reserving Analyst

London (City of)
Negotiable
Reference
149485

Senior GI Modeler - Capital and Planning

London (Central)
£ excellent
Reference
149436

Risk Oversight Manager

Flexible / hybrid with a minimum of 2 days per week office-based
£ excellent
Reference
149435
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ