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UK pension scheme memberships continue to decline

Pension scheme membership in the UK is continuing to decline, according to figures published by the UK's Office for National Statistics.

Responsibility for the decline has been attributed to various sources, but one of the main factors has been the decline of final salary schemes. In 1997, 46% of employees were members of employer-sponsored defined benefit pension schemes, but the number of members adopting a pension scheme has since dropped year upon year. From 2004 to 2005, membership dropped to 35% from 39% the previous year.

Another contributing factor is employers closing final salary schemes to new employees on the grounds that they are too expensive to run, especially due to the increase in life expectancy.

Many employers have replaced the scheme with cheaper money purchase schemes offered to new recruits, as well as to some existing staff members.

Under its recent reformed Pensions Bill, the UK government will make employer provision compulsory in the coming years.