Defined contribution (DC)schemes in the UK’s private sector schemes had stronger inward cash flows than defined benefit (DB) schemes in 2000, according to the Government Actuary’s Department’s latest survey of occupational schemes. This was probably due “to their lower degree of maturity”, says the department.
Contribution rates to private sector DC schemes are a significantly lower than for DB plans, the survey finds, with employee contribution rates typically between 2 to 4% of annual earnings and employers’ less than 8%.
Compared with DB schemes, employee contributions were most commonly in the range of 5 to 7% and employers’ contributions 10 to 15% in contracted out plans.
The survey found that many schemes had altered their rules since1995, the date of the previous GAD survey, in order to close schemes to new entrants or to offer them DC benefits while existing active members continued to build up DB benefits.
The survey provides a very detailed snapshot of where occupational pensions were just a couple of years ago in mid 2000, which can now be regarded as something of a high water mark for occupational pension provision in the UK. There were 5.7m active members in private and 4.5m active of public sector schemes, which had combined assets of £860bn sterling (E1,252bn).

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