The UK is heading for a potentially catastrophic retirement crisis, if figures released by the Office of National Statistics (ONS) are to be believed.
A steep decline of more than £2 billion in pension contributions has been cited in the ONS publication Pension Trends Chapter 8: Pension contributions.
In the financial year 2009/10, total contributions to personal pension schemes were a measly £18.7 billion, compared the £20.9 billion of contributions paid in 2007/08. This has widely been put down to a drop in the number of people contributing as a result of the recession.
The number of people paying contributions to a personal (including stakeholder) pension fell significantly during the recession, with most people who were previously making minimal contributions stopping altogether. It is estimated that, in total, around one million people stopped making contributions to individual pension plans.
The ONS publication also states that, in 2009, 56% of active contributors to private sector defined benefit (DB) schemes were in schemes that had ceased to welcome new members, while DB schemes are still open to most public sector workers.