UK occupational pension schemes valued at £2.36trn in March 2021

The market value of occupational UK pension funds decreased slightly from £2.39trn to £2.36trn in the first quarter of 2021, according to quarterly estimates from the Office for National Statistics (ONS).

As reported by our sister publication, Pensions Age, figures released by the organisation said UK-funded occupational pension schemes had assets of between £2.4trn and £2.9trn at the end of March 2021.

Employee and employer contributions to private sector defined contribution (DC) schemes grew by 6 per cent and 10 per cent respectively in the first quarter, with ONS suggesting that this may be due to a large amount of employees returning to work from furlough.

However, total employer contributions fell by 5 per cent from the fourth quarter of 2020 to the first quarter of 2021, with this being driven by a 27 per cent fall in deficit reduction contributions from £6.2bn to £4.6bn.

Total private DC membership had experienced a quarterly increase of 2 per cent and an increase of 10 per cent compared to the same three-month period in 2020.

While total membership remained stable for private and public sector defined benefit (DB) and hybrid schemes at the end of the first quarter 2021, total private DC membership experienced a quarterly increase of 2 per cent, and an increase of 13 per cent when compared with the third quarter of 2019.

Finally, total benefits fell by 5 per cent between quarter 4 2020 and the first quarter of 2021, with this having been driven by a 9 per cent fall in private sector DB and hybrid benefits during the period.

Commenting on the figures, LCP principal, Chris Bunford, said: "The return of employees from furlough explains the strong increase in employee and ongoing employer contributions across both DC and DB schemes between Q4 2020 and Q1 2021.

“These latest figures do show a sustained uplift from both employee and employer contributions in DC schemes, but it's a different story for the DB world. There has been a steep £1.5bn fall in deficit reduction contributions to DB schemes between these two quarters.

“This has led to overall employer contributions falling by 5 per cent. Many had been breathing a sigh of relief as contribution levels increased at the end of last year, believing that the drop in cash to schemes was just a short pandemic related blip. However, these figures show that cash contributions may still be difficult to come by in these unpredictable times."

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