The number of workers signing up to workplace pensions has dropped to below half (46 per cent) and stands at the lowest level since records began, the Office for National Statistics (ONS) has found.

Its pre-auto-enrolment (AE) figures for 2012, detailed in its Annual Survey of Hours and Earnings (ASHE) report, blamed the sharp drop on the decline in DB schemes.

It stated: “The fall in the proportion of employees with a workplace pension between 1997 and 2012 has been driven mainly by the fall in membership of DB occupational pension schemes.”

ASHE figures found that public sector pensions had a disproportionately higher number of members signed up to a workplace pension than private sector pension schemes.

A total of 83 per cent are workers from the public sector and 32 per cent are private sector employees.

Workers in DB occupational pensions dropped from 46 per cent in 1997 when ONS first collected data on workplace pensions to 28 per cent in 2012; whereas membership of DC schemes fell from 9 per cent to 7 per cent over the same period.

The government’s state pension reform could accelerate the decline in non-public sector DB schemes, Towers Watson warned.

The firm’s senior consultant David Robbins said: “The government’s state pension reforms could accelerate the decline of what is left of DB pension provision outside the public sector. From 2017, employers who still provide DB schemes will lose national insurance rebates that can be worth up to £1,169 per employee in 2013/14.”

He added: “Even without these reforms, final salary pension provision would continue to contract as existing members of schemes that are closed to new entrants retire or get new jobs.”

However, industry figures believe the government’s AE initiative could increase numbers, but some question whether the initiative will offer an adequate solution to workplace pension currently at an all-time low.

Barnett Waddingham consultant Malcolm McLean said: “The early signs from the government’s workplace pension AE programme largely directed at the private sector are promising. However, these may not be enough in terms of the numbers and levels of pensions eventually produced to sufficiently arrest the decline and further measures to reinvigorate pension saving are likely to be required – sooner rather than later.”

Robbins added that it could be some time before signs of improvement can be seen: “Pension scheme membership has fallen sharply in recent years, but this was the final snapshot to be taken before any employers were legally required to automatically enrol staff into pensions. From here, the only way is up but the picture will not be transformed overnight: almost half of the non-savers eligible for AE work for small employers who have been given an extended period of grace and will only start to be brought on board after the general election in 2015."

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