Active membership in workplace pension schemes fell to 8.3 million in 2010, according to research by the Office for National Statistics (ONS).
The figures, from the Occupational pension schemes survey 2010, are the lowest since the 1950s.
Of the active members, 5.3 million were in public sector schemes and three million were in private sector schemes.
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For private sector defined benefit (DB) pension schemes, the average contribution rate in 2010 was 5.1% for employees and 15.8% for employers.
For private sector defined contribution (DC) pension schemes, the average contribution rate in 2010 was 2.7% for employees and 6.2% for employers.
Joanne Segars, chief executive at the National Association of Pension Funds (NAPF), said: “It is astonishing that pension scheme uptake has slumped to such a low level, and with a greying population living longer and longer, it is the last thing our society needs.
“The exodus is especially noticeable in the private sector, where confidence in pensions is running at a record low. People are being put off by stock market turmoil, falling annuities, and mistrust of the pensions industry’s fees and charges.
“While it is understandable that spending gets prioritised during difficult times, it is essential that people do not forget about their retirement. The UK is on a collision course with its own old age.
“People are living almost a decade longer than they were in the mid-1950s, but they simply are not saving enough for their old age. Those who quit their pensions could be storing up cash problems for later in life.
“Landmark reforms to auto-enrol all workers into a pension scheme from next year will make a big difference. Five to nine million people are set to save into a pension scheme for the first time, or to save more.
“This is a huge opportunity to get the UK back on the right track, and the government needs to do all it can to help ensure these reforms are a success. It must not delay these reforms, or exclude smaller businesses from them. It also needs to explain the benefits of a pension, and to bolster trust and confidence in the system.”
Paul Jayson, partner at Barnett Waddingham, added: “The survey illustrates the continued crumbling of the UK’s once fine pension system, specifically in respect of pension provision in the private sector.
“Access to an occupational pension scheme generally reflects a degree of paternalism by an employer towards its staff. The continued reduction of employees covered by such schemes reflects not only a shift in employers’ attitudes towards providing retirement benefits to their workers but also significantly lower contributions being made to fund future benefits.
“For those of us who have worked in the pension industry for many years it is sad to see how increased cost and legislative burdens have caused employers to turn their backs on providing good pension benefits to their staff. The government’s something-is-better-than-nothing attitude with auto-enrolment will do nothing to reverse this trend.”
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