17 July 2006
New figures from the Office for National Statistics show that
employer contributions to occupational pension schemes in the UK
have increased by nearly 60 per cent since last year.
Analysis by Watson Wyatt of figures released by the Office for
National Statistics shows that:
- Employer contributions to self-administered pension funds for
the first quarter of 2006 were £12.2 billion, up 58 per cent or
£4.5 billion on the same quarter last year.
- Employee contributions remain at £1.5 billion. This means that
employer contributions are now eight times those made by
employees.
- While employers' regular contributions have increased (by 21
per cent over the year), most of the increase is due to employers
injecting capital sums to help cover deficits. These special
contributions have increased by 134 per cent to £5.9 billion from
£2.5 billion in the same period last year.
Stephen Yeo, a senior consultant at Watson Wyatt, said: "The
rise in employer contributions is happening earlier and to a
greater extent than many people expected. Companies and trustees
are anticipating the new structure for pension funding that will
apply in future, and some companies are clearly deciding to pay in
much more than the minimum that many commentators expected that
they would.
"If the trend continues over the
remainder of the year, £18 billion more will be paid into schemes
in 2006 than in 2005, which was itself a record year for employer
contributions. While this will reduce aggregate deficits in pension
schemes, it will not necessarily significantly reduce the risks
posed to the Pension Protection Fund because many of the companies
making extra contributions are among the most secure."
