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DC trust: presentation of scheme return data 2018 - 2019

Welcome to the ninth edition of defined contribution (DC) trust, our annual statistics publication. It provides a high-level snapshot of the current landscape of occupational DC trust-based pension provision in the UK, including information on the number and membership of schemes, as well as details on DC memberships of hybrid dual-section schemes.

This year's edition covers around 31,910 current schemes from the pension schemes register, with an effective date of 31 December 2018, of which 2,010 have 12 or more members.

As with last year's release, we've included similar snapshot data from earlier versions of our database. These form a consistent time series, each with an effective date of 31 December for 2009 to 2018.

We provide an automatic enrolment (AE) monthly report, based on information provided by employers when they declare their compliance, a quarterly compliance and enforcement bulletin, and we also publish an annual commentary and analysis on AE.

Executive summary

In this year’s statistics release, we've provided a description of the collection methods for the data contained in the Microsoft Excel (XLSX) files at the end of the page, together with information on what is covered by each of the different files.

  • Files 1, 2, and 3 are based on schemes with 12 or more members (with the exception of table 1.1 in file 1, which is based on all schemes with two or more members).
  • File 4 is based on all schemes with two or more members.
  • File 5 is based on schemes with two to 11 members.
  • File 6 shows relevant effective date information.

You can view and download the files in data tables.

Key findings

View graphs of the key findings for DC trust 2018 - 2019 (PPT, 950KB)

Schemes

  • There are 31,910 occupational schemes with two or more DC members (including hybrid: dual section) (tables 1.1 and 1.18), of which 29,900 (94%) are micro schemes (table 5.1).
  • The total number of occupational schemes with two or more DC members (including hybrids) has declined by 2% (tables 1.1 and 1.18), while the total number with 12 or more members has declined by 8% (table 1.2).
  • Since the beginning of 2010 the number of schemes with 12 or more DC members has declined by 56% (including hybrids) (from 4,560 to 2,010) (table 1.2).
  • There are 74 master trusts registered with TPR. We release monthly figures on the number of master trusts, which has reported 84, figures shown here reflect what we have been told through the scheme return, the monthly figures reflect more recent market intelligence.
  • 52% of schemes use a default investment strategy, a slight increase from last year. 73% of open schemes use a default investment strategy (table 1.9).

Memberships

  • 61% of all private sector workplace pension members (including active, deferred and pensioner) are in DC schemes, and 90% of all those currently saving (active members) are investing into a DC scheme (landscape table below).
  • Membership in schemes with 12 or more members increased by 33% over the past year (compared to 29% last year), and has increased by over 640% since the beginning of 2010 (table 2.1).
  • Deferred membership has increased by more (45%) in the past year than active membership (24%).
  • Membership of master trusts has increased from 270,000 at the beginning of 2012 (DC trust statistics, Jan 2012, table 1.e), to just over 13.9 million this year (table 2.17).
  • 95% of members of DC schemes with 12 or more members are invested in the scheme’s default strategy (table 2.13).

Financial information

  • Assets in schemes with 12 or more members increased by 25% this year, compared to 22% last year (table 3.1). Asset changes are made up of contributions (including transfers in) and investment returns, and are reduced by retirements and transfers out.
  • Asset values are now £60 billion, an increase of 172% since the beginning of 2011 (table 3.1).
  • Average assets per membership at retirement increased last year, from £9,000 to £9,800. (table 2.16 and table 3.5).
  • The total amount transferred in to DC schemes has increased by almost 150%, from £2 billion to almost £5 billion (table 3.6). This includes transfers from DB schemes and also from other DC schemes.
  • Contributions increased by 22% last year, compared to 21% the year before (table 3.3).
  • The total amount transferred out of DC schemes to other workplace or personal pensions has increased by 22% in the past year, from £1.7 billion (DC trust statistics 2018, table 3.5) to £2.1 billion (table 3.5).

Automatic enrolment

  • 950 schemes are being used for AE (table 4.1), a decrease from 970 last year (DC trust statistics 2018, table 4.1). This is the first decrease we have seen since the introduction of automatic enrolment.
  • 98% of members are in schemes being used for AE (table 4.4), up from 97% last year (DC trust statistics 2018, table 4.4).

Micro schemes

  • Of those which can be identified, 87% of micro schemes are schemes formerly known as small self-administered schemes (SSAS) (table 5.1).

The landscape

The table below represents the private pension landscape in the UK, showing at a high level the different forms of employer-sponsored provision available within the private sector, and giving an overview of the size of each type of provision[1].

Defined benefit Hybrid: mixed benefit[2] Hybrid: dual-section DC (trust)  DC (workplace contract)[3]
Schemes 4,940 190 740 31,170 2,140
Open schemes 720 20 360 24,790 1,750
Total memberships 6,824,000 994,000 4,957,000 14,977,000  N/A
Total active members 688,000 236,000 1,123,000 8,459,000 5,640,000

Sources: All figures from TPR's data based on scheme returns, 31 December 2018 except DC (workplace contract) total active members, from Annual survey of hours and earnings (ASHE) 2017 (published March 2018). Please note: the ASHE 2017 reports 6.4 million active members of DC trust-based schemes and 388,000 active members in schemes where the type was unknown.

Hybrid schemes

DC trust focuses on the areas marked as DC (trust) and DC memberships of hybrid dual-section schemes. We do not include data on assets held in DC sections of hybrid schemes, as we do not collect this information.

There are many varieties of hybrid schemes, but they can broadly be classed as either mixed benefit or dual-section:

  • A mixed benefit scheme offers one set of benefits which has elements of both defined benefit (DB) and DC schemes, such as a DC scheme with an underpin on a DB basis[2].
  • A dual-section scheme has two sections - one offering DC benefits and the other offering DB benefits.

Contract-based schemes

DC work-based personal pension schemes, also known as contract-based schemes, are excluded from this release, other than in the above table. The term ‘scheme’ here refers to the number of products offered by providers, and not to the number of employers who have bought into those products. These types of scheme consist of:

  • group personal pensions (GPPs)
  • group self-invested personal pensions (GSIPPs)
  • group stakeholder pensions (GSHPs)

DC contract-based schemes are subject to a different regulatory framework from DC trust-based occupational schemes. We work jointly with the Financial Conduct Authority (FCA) in the regulation of contract-based schemes. While contract-based schemes are obliged to register with us, they provide significantly less information than trust-based schemes. As a result, the above table is able to provide a figure for the total number of contract-based schemes. Furthermore, in order to provide landscape context, a figure is sourced from the Office for National Statistics (ONS) for the total number of active contract-based members. Beyond that, all types of DC contract-based provision, both group and individual, are outside the scope of this statistics release.

The data tables include figures for the total number of master trust schemes (and members within those schemes), excluding micro schemes and hybrid schemes. The table below provides totals including micro schemes and hybrid schemes.

All master trusts with DC members
Total schemes 74
Open schemes 61
Active DC memberships 7,762,000
Reported assets (excluding hybrid) £29,179,000,000
DC members in schemes which reported assets 13,912,000
Total DC members (includes hybrids) 13,952,000

The first three files of this statistics release, file 1: schemes, file 2: memberships, and file 3: financials, refer to occupational DC trust-based schemes with 12 or more memberships (with the exception of table 1 in file 1). These schemes account for 7% of the total universe of DC trust schemes[4], but more than 99% of the memberships. File 4: AE schemes refer to all schemes with two or more DC members.

File 5: micro schemes is concerned with schemes of 2 to 11 memberships. File 6: effective date information includes information on the effective dates[5] for data submitted on memberships, contributions and assets.

As at 30 November 2018, 84% of schemes have an effective date for their membership data after 31 December 2015 and this represents 93% of members (table 6.1).

For contribution data, 83% of 12-plus member DC schemes (those with 12 or more members and are not hybrid) have provided information whose effective date is 31 December 2015 or later, and this covers 98% of reported contributions (table 6.1).

For asset data, 83% of schemes that have 12 or more members and are not hybrid have provided information whose effective date is 31 December 2015 or later, and this covers 99% of reported assets (table 6.1).

For micro schemes 83% have an effective date for their membership information of 31 December 2013 or later, and this covers 84% of memberships (table 6.2). 81% of micro schemes have provided contribution information, and 92% of these provided information with an effective date of 31 December 2013 or later (table 6.2).

Data collection

Pension schemes in the UK with two or more memberships are required to register with us. At the point of registration, an occupational scheme provides us with registrable information, which includes the following information:

  • scheme name and contact details
  • scheme status (eg open, closed)
  • membership information
  • details about the relevant employer(s), trustees and service providers

In addition to registration, we also operate a scheme return process.

The scheme return is how we collect information about occupational pension schemes. We are required to collect scheme return information from each scheme no more than once a year and no less than once every five years. The current practice is for DC schemes with 12 or more members to complete a scheme return annually and schemes with two to 11 members to complete once every three years.

Scheme returns are submitted using our online reporting tool, Exchange. This offers several advantages, one of which is that schemes can log in to alter their details at any time using the scheme maintenance process.

We ask for more information for occupational DC trust-based schemes with 12 or more memberships in the scheme return than for smaller schemes, such as scheme leaver financial amounts, default strategy and decumulation options.

The information in this publication is based on data provided by schemes on returns we issued from July to December 2018 and relates to the levy year 2017-2018 or earlier. Therefore, the figures may not yet reflect all changes in DC memberships (including from automatic enrolment) through to December 2018.

Relevant small schemes

Relevant small schemes (a subset of micro schemes) are subject to fewer regulations than other occupational DC schemes, and they include schemes formerly known as small self-administered schemes (SSAS), and executive pension plans (EPP). We’ve recently added a question to the scheme return to identify EPPs, but this question has not yet been through the full cycle as schemes with fewer than 12 members only complete a return once every three years. As a result, this data is not included here and we are not currently able to provide statistics on the population of relevant small schemes. We’re continuing to provide figures in respect of schemes formerly known as SSAS.

We request information from schemes via the scheme return, which we use to assess whether they are (or were) SSAS. We ask schemes to confirm the following:

  • Whether the scheme has no more than 11 members.
  • Whether all members are appointed as trustees to the scheme or all members are directors of the company, which is the sole trustee of the scheme.
  • If the scheme’s provisions provide that any decisions to be made by the trustee(s) are made by unanimous agreement of the trustees who are members of the scheme / directors of the corporate trustee who are members of the scheme (as applicable) or the scheme has a trustee / corporate trustee/ director (as applicable) who is independent in relation to the scheme for the purposes of section 23 of the Pensions Act 1995 and is registered on our trustee register.

Pensioner members

Pensioner members are not included in DC trust. This is because our figures for pensioner members do not necessarily represent the number of members who have retired but remained in the scheme. Therefore, we cannot be confident that the number of pensioner members represents the total number of retirees from that scheme, including those who transferred out. We do however report the number of members for whom the scheme is providing (self-annuitisation) or facilitating (lifetime annuities) the annuity payments.

Footnotes for this section

  • [1] For the purposes of this document, our remit extends to all private sector pensions where an employer facilitates contribution payments, and therefore our figures exclude personal pensions where an individual has purchased a product directly from a provider and there is no direct payment arrangement.
  • [2] Also known as 'true hybrid'.
  • [3] Annual survey of hours and earnings, Office for National Statistics (revised version released 26 March 2018): rounded estimate of number of jobs where the employee has taken up a workplace group personal or group stakeholder pension. This excludes individual personal pensions.
  • [4] Where the universe refers to all occupational DC or hybrid schemes with two or more DC memberships.
  • [5] The term effective date in this context (and in file 6 generally) refers to the date supplied with the information by respondents. For instance, if a scheme counts its members on 1 April 2014, and then reports this figure to us on 1 May 2014, the effective date will be 1 April 2014.

Calculations

In most cases, the data we show here is a direct summary of the data we hold. However, in some cases we've performed some simple calculations to provide more useful information. In such cases, we've also included the direct data from which we made the calculations, in a separate tab in the file labelled 'calculations'.

Total schemes year on year

In order to create the time series of total schemes year on year, we start with the total number of DC schemes with two or more memberships on the register as at 31 December 2018. We then use a table showing the total number of registrations each year, and the total number of schemes winding up each year. By removing the schemes established during 2018, and adding the schemes that wound up that year, we create an estimate for the number of schemes as at 31 December 2017.

We continue this process back to 1997, the year when the Occupational Pensions Regulatory Authority (OPRA), our predecessor, took responsibility for maintaining the pension schemes register. In the calculations tab the number of wind ups and registrations per year is shown dating back to 1988, as there is a significant peak in registrations that year.

Market value of scheme assets

While the significant majority of relevant schemes have provided us with their market value of scheme assets, it's not completed by every scheme. Within the data files, we've shown data for the amount of assets that have been reported to us, as well as the memberships in schemes that have reported an asset figure. We limit this to reporting those asset values whose effective date is on or after 1 January 2016.

In order to allow users to estimate the total amount of assets within these schemes we've provided information to enable average assets to be calculated per member for each scheme size and status banding (where size is based on the number of members) for those schemes who have supplied the information.

Annual contributions (by employer and employee)

The issue for market value of scheme assets is also present for annual contributions. Within the files, we've shown data for reported contributions and active members in schemes which have reported contributions. We limit this to reporting those contribution values whose effective date is on or after 1 January 2016.

We've used the same method to enable an extrapolated estimate for the total amount of contributions to trust-based DC schemes as for our estimate of assets in such schemes. The difference with respect to contributions is that we provide the active members, rather than all members, as only active members are contributing.

The active members figure could include members who were only active for part of the year.

Governance structure

The governance structure theme is designed to show the number of master trusts, (schemes with non-associated employers), which has been a growth since the introduction of automatic enrolment, and also to separate out those schemes that have been created by employers (unbundled) from those which have been purchased through a pension provider (bundled).

The scheme return doesn't have a question that provides the bundled / unbundled split so we made an estimate by analysing data provided on the insurer or administrator. Where the same company is listed as both administrator and insurer, we classed this as a bundled scheme. Where the companies are different we classed them as unbundled, and if the administrator is not present, we labelled them 'unknown'.

Last year, we started incorporating email addresses into this data cleaning process, so if a scheme provides an individual’s name as their administrator, we then check the email address for that individual and, if relevant, assign that scheme to the appropriate company. This reduces the number of unknown schemes.

In addition, there has also been a change to the assumption made. Previously, where a scheme did not provide an insurer name, they were classed as ‘unknown’. For the purpose of these statistics, it is assumed that all bundled schemes will have an insurer, so where a scheme does not provide an insurer name it is classed as ‘unbundled’.

Amounts leaving schemes

As with assets and contributions, the amounts leaving schemes has not been supplied by all schemes. In the data files, we show information for the reported amounts leaving schemes, and the number of members in schemes which have reported their leaver amounts.

Transfers into schemes

As with assets, contributions and leaver amounts, not all schemes have supplied relevant transfer-in data. In the data files, we show information for the amounts reported to be transferred into schemes, and the number of active members in schemes that have reported transfers in.

It should be noted that where members or amounts are flagged as being transferred this means they have been moved from another workplace pension scheme.

Definitions

Governance structures

Master trust

In the Pension Schemes Act 2017, a master trust scheme is defined as an occupational pension scheme that is:

  • used by more than one employer
  • provides money purchase pensions (either alone or with other benefits)
  • not a public sector scheme or used only by connected employers

Bundled / unbundled scheme

A bundled scheme is one where the majority of services are purchased through a single corporate entity, and an unbundled scheme is one where services are provided through different companies.

Relevant small schemes (RSS)

A scheme which fits the criteria of being either a SSAS or an EPP.

Small self-administered scheme (SSAS)

A scheme with fewer than 12 members where all the members are trustees of the scheme and decisions either have to be made unanimously or there is an independent trustee appointed to the scheme who appears on our trustee register. Where there is a sole corporate trustee, the above conditions apply in relation to the directors of the corporate trustee.

Executive pension plan (EPP)

An executive pension scheme is a scheme:

(a) in relation to which a company is the only employer and the sole trustee and

(b) the members of which are either current or former directors of the company and include at least one third of the current directors

Decumulation options

A scheme offering a lifetime annuity purchases an annuity in the name of the trustees at the point of retirement, and then facilitates payment of that annuity to the member. A scheme offering self-annuitisation will calculate an annuity payment for the member and make the payment to the member directly from scheme funds. Should the member use the fund they have built up to purchase an annuity in their own name then they cease to be a member of the scheme.

You can find information about decumulation options in file 1: schemes and file 2: memberships.

Scheme status

Open to new joiners and future service Closed to new joiners, open to future service Closed to new joiners and future service Winding up
New members are allowed to join the scheme New members are not allowed to join the scheme New members are not allowed to join the scheme New members are not allowed to join the scheme
Existing members are (or employers) allowed to continue contributing Existing members are (or employers) allowed to continue contributing Existing members are (or employers) not allowed to continue contributing Existing members are (or employers) not allowed to continue contributing
Funds continue to be invested Funds continue to be invested Funds continue to be invested Funds continue to be invested
Funds continue to attract charges Funds continue to attract charges Funds continue to attract charges Funds continue to attract charges

Member status

Active Deferred Pensioner
A scheme member who is continuing with future service A scheme member who has ceased future service, but has built up benefits which remain in the scheme A scheme member who is being paid a pension. An annuity has been purchased on their behalf in the name of the trustees of the scheme, or the scheme is paying a retirement income directly from scheme funds
Funds continue to be invested Funds continue to be invested Funds can remain invested if the scheme operates a decumulation option
Funds continue to attract charges Funds continue to attract charges Funds can continue to attract charges if the scheme operates a decumulation option

The number of memberships does not equate to the number of individuals, as one individual can have multiple memberships.

Dependants

In DC schemes which operate self-annuitisation or lifetime annuities, a member may have the option to purchase a joint life annuity. In this case, a nominated dependant will receive a proportion of the member’s retirement income for the rest of their life, should the member die before the dependant. Membership figures collected reflect those members who are relevant for calculation of the pension levy. As dependants are not included in this they are not reported to us and so dependants are not included in the statistics in this release.

Data tables