The statistics, which cover almost all types of private pension arrange ments including unfunded public sector schemes and personal pensions, show that total contributions rose from £49 billion in 2001 to £83.8 billion in 2006. Growth in 2007 was slower, with private pension scheme contributions increasing to £85.2 billion. The ONS’s explan ation for this is that many defined-benefit schemes moved into surplus during that year.

The accompanying chart illustrates contributions to private pensions by scheme classification between 1995 and 2007. As can be seen, much of the growth has been fuelled by increases in contributions to funded occupational schemes, where total contributions rose from £16.3 billion in 1995 to £44 billion in 2007

Increased employer costs

The statistics are also broken down to show the split of contributions as between employers and employees. These figures illustrate how the em ployers’ share of contributions has increased over the years. Between 1995 and 2007, employees’ contributions almost doubled, from £13.6 billion to £25.7 billion. However, employ ers’ contributions increased almost threefold in the same period, from £19.8 billion to £59.5 billion.

The one area in which the employees’ share of contributions has risen more than the employers is in the public sector where, according to the ONS, in the seven-year period to 2007 the proportion of total contributions made to unfunded public sector schemes by employees rose from 26% to 35%.

Changing methodology

Over the years the ONS has tried to improve its methodology for estimating total private pension contributions. Most of the data are derived from ONS sources. However, the paper reveals that the ONS has experienced problems obtaining accurate information on new contributions to insurancemanaged pension funds. Therefore, for the first time, it has used data taken from a survey by the Association of British Insurers, which it believes are more reliable.

The final part of the paper attempts to reconcile the ONS estimates for total contributions to funded private arrangements with those shown in the UK’s national accounts, known as the “Blue Book”. This demonstrates that most of the discrepancies between the two sets of data arise from inaccuracies in the figures used in the Blue Book in respect of insurance-managed schemes. It suggests that the Blue Book overest imates these figures, possibly because it is including transfers between insured schemes rather than just new money.

¹ “Private Pension Contributions: Updated Estimates 1995–2007”, by David Miller, available on the ONS website (at www.statistics.gov.uk/default.asp), via “Pension Trends” (on right), then “Go to archive, news releases and articles” (centre) and title of article.