UK employees paid more into defined contribution (DC) pension schemes than defined benefit (DB) schemes for the first time last year, the Office for National Statistics has revealed.
The figures show that employee contributions into DB pensions fell from £3.4bn to £3.2bn in 2018, while the amount paid into DC schemes rocketed from £1.4bn to £4.1bn.
The data highlights the astonishing rise of DC schemes in recent years, with employees contributing less than £0.5bn back in 2013.
And the figures do not cover group pension plans offered by insurers, so actually underestimate the total amount paid into DC schemes last year.
Employers are still paying more into DB schemes, however, pension firm Aegon said this may soon change after minimum contributions increase from 2% to 3% in April.
"The latest figures show the meteoric rise in DC pensions, fuelled by automatic enrolment and the huge growth in master trusts," pensions director, Steven Cameron, said.
"With the continued decline in DB in the private sector, and with auto enrolment minimum contributions rising, we may in 2020 see DC overtake DB for employer contributions too."
This comes after it was revealed last month that DC pension scheme assets now account for over half of total assets in the world's seven largest markets for the first time.
The research from Willis Towers Watson (WLTW) showed that DC assets have grown by 8.9% over the last decade, compared with 4.6% for DB assets.
The average asset allocation of the 'P7' markets - Australia, Canada, Japan, the Netherlands, Switzerland, the UK and US - is 40% equities, 31% bonds, 26% other and 3% cash.
This marks a 20% fall in equity allocations over the past 20 years, and a 19% rise in investments in other assets like real estate.
Roger Urwin, of WLTW's Thinking Ahead Institute, said DC pension asset growth has reached a "pivotal moment", but that the next five to 10 years present a range of challenges.
"These include the shifting focus in pension design towards a DC model, the growing impact of evolved regulations and integration of ESG, stewardship and long-horizon investing," he added.
