Growth in occupational defined contribution scheme membership slowed in Q2 2020
Member contributions to funded occupational defined contribution (DC) pension schemes fell by 11.2 per cent between Q1 and Q2 2020, according to figures from the Office for National Statistics (ONS).
Amid the spring Covid-19 lockdown, workers’ contributions fell from £1.8bn in Q1 to £1.6bn in Q2.
During the same period, employer contributions fell by 5 per cent, from £3.9bn to £3.7bn.
Growth in occupational DC scheme membership slowed in Q2 2020, with membership increasing by 0.4 per cent from the end of Q1 to just over 23 million, compared with 22.4 million members at the end of 2019.
The ONS stated that the slowdown in growth may have been because of the impact of Covid-19 on the labour market, but “caution is advised in interpreting these results”.
Total pension payments and income withdrawal declined by 4 per cent in Q2 in comparison to Q4 2019, although there was a 5 per cent rise in lump sum benefits paid by schemes during the same period, with around two-thirds of these coming from private sector defined benefit (DB) schemes.
The value of assets in DC schemes, excluding derivatives, fell by 12 per cent during Q1 2020, but had recovered to Q4 2019 levels by the end of June 2020.
However, the ONS said that private sector DB and hybrid schemes’ investments were less affected by the stock market fall, with the value of assets, excluding derivatives, for these scheme types increasing by 2 per cent in Q1 2020 and 6 per cent in Q2.
During the first lockdown, at a time when some were losing jobs or at least part of their income, the growth in membership of workplace pension schemes slowed and contributions declined, said Interactive Investor head of pensions and savings, Becky O’Connor.