Uptake of defined contribution (DC) pension schemes is not growing at a fast enough rate to fill the gap defined benefit (DB) closure has left, resulting in two thirds of the private sector workforce not having a pension, says the Trades Union Congress (TUC).

Government analysis of official private sector pensions statistics shows that there was a 5.1 per cent drop in the proportion of the working population in the private sector in membership of a DB pension, from 18.6 per cent in 2005 to 13.5 per cent in 2008.

In terms of DC scheme uptake, there was an increase of just 1.9 per cent, from 19.9 per cent in 2005 to 21.8 per cent in 2008. However, between 2007 and 2008, the number of people actually enrolled in a DC scheme, fell.

Since 2000, when 54.6 per cent of the working population was without pensions, only one year - 2002 - has recorded a drop in the number of 'unpensioned' members of the UK workforce, when stakeholder pensions were introduced. In 2008, 62.6 per cent were apparently without any retirement provision.

"Many seem to think that the hole left by the closure of private sector salary pension schemes is being plugged to some extent by new money-purchase DC schemes, albeit of lower quality," said Brendan Barber, the TUC's general secretary. "But these figures show that this is not true. The growth of DC coverage is much slower than the sharp fall in DB provision. The most recent figures even show that more people are building up a DB pension than are doing so in a DC scheme with a modest employer contribution."

Barber added that the "real scandal" in the pensions debate was not that of public sector provision, but the amount of private sector workers who had no pension to their name.

"No wonder employer groups are so keen to attack public-sector pensions," he said. "It's a good diversion from the continuing retreat by employers from providing any kind of pension. This is an inevitable consequence of the ruthless deal led economy that makes investors see any kind of company that offers a decent pension as part of a long-term commitment to staff as soft and inefficient.

"At least from 2012 every employer will have to auto-enrol staff in a pension and make contribution - and it's good to see an all-party consensus for this. But people should not think that the 2012 contribution levels will build up the kind of pension that most expect."

The data that the TUC used to draw its conclusions is available here.

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