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Annual report on UK defined benefit and hybrid schemes 2022

Annual report on defined benefit (DB) occupational pension schemes, including those also providing defined contribution (DC) benefits.

Published: 8 December 2022

Introduction

The data

The data contained in this statistical release was submitted by occupational defined benefit (DB) pension schemes registered with The Pensions Regulator (TPR) in annual scheme returns.

The data set builds on previous releases, focusing specifically on the population of UK DB pension schemes, effective as of 31 March 2022. Data presented for prior periods may differ to that presented in previous releases for a number of reasons including:

  • late / subsequent submission of data from schemes affecting their position in prior periods
  • changes to the identification and treatment of DB relevant small schemes (formerly known as DB small self-administered schemes)
  • changes to the identification and treatment of schemes eligible for the Pensions Act 2004 Part 3 funding regime
  • changes to data coverage resulting from enhanced data validation and cleaning

As some individuals may have a number of pension entitlements spread over a number of schemes, they may be included more than once in the total memberships under consideration.

Figure totals may reflect rounding, and the sum of proportions or percentage figures may not equate to exactly 100% in all instances for this reason.

Private sector occupational DB schemes

The data set used in this publication is primarily based on an extract from the pension schemes register as of 31 March 2022. This aims to include registrable DB and hybrid occupational schemes with more than one member that are eligible for the Pension Protection Fund (PPF) and / or are subject to the Pensions Act 2004 Part 3 funding regime as of 31 March 2022, with the addition of those schemes in the process of winding up.

This year, the main DB landscape data set covers 5,378 schemes[1]. The declining universe – in terms of the year-on-year population presented here – reflects schemes completing the process of winding up, scheme mergers and schemes entering the PPF.

The data set underpinning the Part 3 technical provisions (TPs) funding figures covers a lesser 5,123 schemes, as we are not able to calculate funding figures for all schemes in the parent population of 5,378 at the calculation effective date. Schemes in the process of winding up are not processed in this way, for example, and there are instances where a scheme is not yet liable to submit a Part 3 valuation, or where certain items of data used in the calculation were not available. The data set used for funding covers 97% of the memberships found in the parent population of 5,378 schemes.

This data differs from the PPF’s Purple Book data set in that the latter includes only those schemes eligible for the PPF. Read more about PPF eligibility on the PPF website. The schemes in this data set that do not appear in the Purple Book will include schemes with a Crown guarantee and others with features prohibiting PPF eligibility. The additional schemes make up a relatively small proportion of the population by membership and assets – more details can be found in the appendix.

Schemes with more than 5,000 members account for around 75% of each of the population’s total assets, liabilities and members, while only forming around 7% of the total number of schemes in the main data set. Conversely, schemes with fewer than 1,000 members make up around 80% of the total number of schemes but only around 10% of total assets, liabilities and members.

Public service occupational DB schemes

The data covering public service occupational DB pension schemes is presented separately to that covering private sector occupational DB pension schemes.

Public service pension schemes provide pensions for civil servants, the judiciary, local government, teachers, health service workers, members of fire and rescue services, members of police forces and members of the armed forces. These schemes cover over 17.2 million memberships, and around 25,000 individual employers.

Until 2015, pension provision in the public sector was provided on a final salary basis. Since then, however, workers in all open public service schemes have accrued benefits on a Career Average (CARE) basis.

There are 21 public service pension schemes. Of these, the Local Government Pension Scheme, Fire and Rescue Service Pension Scheme and Police Pension Scheme are locally administered. We treat each of the locally administered sections as a separate scheme and therefore regard the public service landscape as having 204 schemes.

Public service pension schemes are governed differently from other occupational pension schemes. They do not have trustees – instead the overall management and / or administrative responsibility for the schemes sits with scheme managers. Scheme managers are supported by pension boards, which assist them in complying with their legal duties. The local government pension schemes and some existing public body schemes are funded, but the others all operate on a ‘pay as you go’ basis.

Part 3 funding figures

The funding figures presented in this release represent estimated assets and TPs liabilities of private sector occupational DB schemes, rolled forward from their most recent Pensions Act 2004 Part 3 actuarial valuation to a common date of 31 March 2022.

An actuarial or funding valuation is a calculation made by an actuary of the assets needed for the scheme to meet its statutory funding objective. These include pensions in payment (including those payable to survivors of former members) and benefits accrued by other members and beneficiaries, which will become payable in the future.

We have processed the figures so they are all estimated at a common date of 31 March 2022. The model is designed to estimate individual scheme specific data from different dates (for example, scheme specific date of actuarial valuations) to a single date for all schemes.

The model estimates changes in the amount of liabilities for individual schemes between their latest valuation date (as reported by the trustees in their scheme return or recovery plan submission) and a common date by tracking changes in fixed interest and index-linked gilt yields and prior to the COVID-19 pandemic by tracking the results from the annual CMI mortality projections analysis. Due to the uncertain impact of COVID-19, we have not made any further adjustments on how this might impact the trustees’ mortality assumption. It measures the corresponding changes in asset positions by tracking the performance of the relevant indices (based on the asset allocations as reported by the trustees in their scheme return).

The model tracks the effect of changed market conditions between these two dates on a consistent basis for all schemes. This basis is reviewed regularly. It does not consider any other changes to a scheme’s asset and liability profile due to scheme experience, benefit changes, post valuation benefit accrual, demographic changes, curtailments, settlements, changes in asset strategy, scheme specific investment performance, contingent assets, or covenant support.

Footnotes for this section

  • [1] The number of schemes in this estimate as of 31 March 2022 could be different from 5,378 if any of these schemes are discovered to be ineligible for PPF protection / the Part 3 regime, or if any additional schemes are discovered to be eligible for PPF protection / the Part 3 regime, as of 31 March 2022.

Scheme status and memberships

Scheme status in this release is split between:

  • open schemes, where new members can join the DB section of the scheme and accrue benefits
  • schemes closed to new members (CTNM), in which existing members continue to accrue benefits
  • schemes closed to future accruals (CTFA), where existing members can no longer accrue new years of service and no new members can join
  • schemes that are in the process of winding up

Where schemes provide both DB and DC benefits, it is often the case that it is no longer possible to join as a member accruing defined benefits. In these cases, we have adjusted the status to CTNM. 62 schemes had their status changed in this way, encompassing around 494,000 memberships.

Where schemes have no active DB accruing memberships, the status is adjusted to CTFA. 140 schemes had their status adjusted in this way, which in total comprised around 935,000 memberships. 

In all other cases, statuses are taken to be as submitted by the scheme.    

Schemes by status

Figure 1: Distribution of schemes by status

Figure 1 data: Data underlying Figure 1, pertaining to the distribution of schemes by status

Status Number of Schemes
A: Open 505
B: CTNM 1,989
C: CTFA 2,687
D: Winding Up 197

Table 1: Scheme status by year

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
A: Open 13% 13% 13% 13% 13% 13% 12% 11% 10% 10% 9%
B: CTNM 48% 47% 48% 47% 46% 45% 44% 41% 40% 38% 37%
C: CTFA 28% 31% 33% 34% 36% 39% 41% 44% 47% 48% 50%
D: Winding Up 11% 9% 7% 6% 5% 4% 4% 3% 3% 4% 4%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Number of schemes 7,297 6,974 6,657 6,396 6,206 5,973 5,805 5,701 5,604 5,522 5,378

Table 2: Scheme status by year excluding schemes offering both DB and DC benefits

Status 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
A: Open 15% 15% 15% 14% 14% 13% 12% 11% 10% 10% 10%
B: CTNM 46% 46% 46% 46% 45% 43% 42% 40% 39% 37% 36%
C: CTFA 27% 30% 32% 34% 36% 39% 41% 45% 47% 49% 50%
D: Winding Up 12% 9% 7% 6% 5% 5% 4% 4% 4% 4% 4%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Figure 2: Distribution of schemes by status and year

Figure 2 data: Data underlying Figure 2, pertaining to the distribution of schemes by status and year

Status Year Percentage
A: Open 2012 13%
A: Open 2013 13%
A: Open 2014 13%
A: Open 2015 13%
A: Open 2016 13%
A: Open 2017 12%
A: Open 2018 12%
A: Open 2019 11%
A: Open 2020 10%
A: Open 2021 10%
A: Open 2022 9%
B: CTNM 2012 48%
B: CTNM 2013 47%
B: CTNM 2014 48%
B: CTNM 2015 47%
B: CTNM 2016 46%
B: CTNM 2017 45%
B: CTNM 2018 44%
B: CTNM 2019 41%
B: CTNM 2020 40%
B: CTNM 2021 38%
B: CTNM 2022 37%
C: CTFA 2012 28%
C: CTFA 2013 31%
C: CTFA 2014 33%
C: CTFA 2015 34%
C: CTFA 2016 36%
C: CTFA 2017 39%
C: CTFA 2018 41%
C: CTFA 2019 44%
C: CTFA 2020 47%
C: CTFA 2021 48%
C: CTFA 2022 50%
D: Winding Up 2012 11%
D: Winding Up 2013 9%
D: Winding Up 2014 7%
D: Winding Up 2015 6%
D: Winding Up 2016 5%
D: Winding Up 2017 4%
D: Winding Up 2018 4%
D: Winding Up 2019 4%
D: Winding Up 2020 4%
D: Winding Up 2021 4%
D: Winding Up 2022 4%

Figure 3: Distribution of schemes by status and member group

Figure 3 data: Data underlying Figure 3, pertaining to the distribution of schemes by status and member group

Status Member Group Percentage
A: Open A: 2 - 99 12%
A: Open B: 100 - 999 6%
A: Open C: 1,000 - 4,999 10%
A: Open D: 5,000 - 9,999 17%
A: Open E: 10,000 + 17%
B: CTNM A: 2 - 99 34%
B: CTNM B: 100 - 999 37%
B: CTNM C: 1,000 - 4,999 41%
B: CTNM D: 5,000 - 9,999 43%
B: CTNM E: 10,000 + 49%
C: CTFA A: 2 - 99 47%
C: CTFA B: 100 - 999 55%
C: CTFA C: 1,000 - 4,999 48%
C: CTFA D: 5,000 - 9,999 39%
C: CTFA E: 10,000 + 33%
D: Winding Up A: 2 - 99 7%
D: Winding Up B: 100 - 999 2%
D: Winding Up C: 1,000 - 4,999 1%
D: Winding Up D: 5,000 - 9,999 1%
D: Winding Up E: 10,000 + 1%

Membership by status

Figure 4: Distribution of memberships by status

Figure 4 data: Data underlying Figure 4, pertaining to the distribution of memberships by status

Status Number of memberships Percentage of memberships
A: Open 2,058,777 21%
B: CTNM 4,297,402 44%
C: CTFA 3,368,114 34%
D: Winding Up 72,357 1%

Table 3: Distribution of memberships by status and year

Status 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
A: Open 25% 21% 21% 20% 18% 19% 19% 19% 20% 21% 21%
B: CTNM 62% 61% 60% 58% 59% 56% 54% 52% 49% 46% 44%
C: CTFA 11% 16% 18% 21% 22% 23% 25% 29% 30% 32% 34%
D: Winding Up 2% 2% 2% 1% 2% 1% 1% 1% 1% 1% 1%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Table 4: Number of memberships by status and membership type

Status Active Deferred Pensioner
A: Open 566,829 806,502 685,446
B: CTNM 218,915 2,027,418 2,050,857
C: CTFA 0 1,875,994 1,492,120
D: Winding Up 0 33,901 38,456
Total 785,744 4,743,815 4,266,879

Membership by size

Table 5: Number of memberships by membership group and membership type

Membership group Active Deferred Pensioner
A: 2 - 99 3,527 37,532 44,718
B: 100 - 999 32,690 395,840 366,239
C: 1,000 - 4,999 94,124 790,592 713,694
D: 5,000 - 9,999 88,541 508,693 488,107
E: 10,000 + 566,862 3,011,158 2,654,121
Total 785,744 4,743,815 4,266,879

Membership by year

Figure 5: Memberships by type and year

Figure 5 data: Data underlying Figure 5, pertaining to the number of memberships by type and year

Year Active memberships Deferred memberships Pensioner memberships
2012 2,098,832 5,962,746 4,747,805
2013 1,923,447 5,934,726 4,826,893
2014 1,825,739 5,759,914 4,799,853
2015 1,736,782 5,819,924 4,872,638
2016 1,414,492 5,700,747 4,671,850
2017 1,340,900 5,471,523 4,603,368
2018 1,272,282 5,383,346 4,585,165
2019 1,086,733 5,236,325 4,588,475
2020 1,017,211 5,054,710 4,582,563
2021 909,502 4,929,601 4,526,214
2022 785,744 4,743,815 4,266,879

Schemes and memberships by principal employer type

Table 6: Proportion of schemes by status and principal employer type (% by status)

Principal employer type A: Open B: CTNM C: CTFA D: Winding up Total
College or education institution 32% 30% 34% 4% 100%
Government / public body 18% 27% 55% 0% 100%
Limited liability partnership 0% 30% 69% 2% 100%
Other 13% 40% 45% 2% 100%
Overseas Company 0% 34% 61% 5% 100%
Partnership 0% 48% 48% 3% 100%
Private limited company 5% 36% 57% 2% 100%
Public limited company 5% 41% 52% 2% 100%
Registered charity 5% 38% 56% 2% 100%
Sole trader 0% 50% 50% 0% 100%

Table 7: Proportion of memberships by status and principal employer type (% by status)

Principal employer type A: Open B: CTNM C: CTFA D: Winding up Total
College or education institution 75% 18% 6% 0% 100%
Government / public body 4% 7% 90% 0% 100%
Limited liability partnership 0% 32% 59% 8% 100%
Other 16% 51% 33% 0% 100%
Overseas Company 0% 14% 69% 18% 100%
Partnership 0% 50% 49% 0% 100%
Private limited company 19% 40% 40% 1% 100%
Public limited company 11% 47% 41% 1% 100%
Registered charity 24% 36% 40% 0% 100%
Sole trader 0% 84% 16% 0% 100%

Table 8: Proportion of schemes by principal employer type and status (% by employer type)

Principal employer type A: Open B: CTNM C: CTFA D: Winding up
College or education institution 6% 1% 1% 2%
Government / public body 1% 0% 0% 0%
Limited liability partnership 0% 1% 2% 1%
Other 23% 11% 8% 10%
Overseas Company 0% 1% 1% 2%
Partnership 0% 1% 1% 1%
Private limited company 58% 70% 74% 72%
Public limited company 7% 10% 8% 7%
Registered charity 4% 6% 6% 4%
Sole trader 0% 0% 0% 0%
Total 100% 100% 100% 100%

Table 9: Proportion of memberships by principal employer type and status (% by employer type)

Principal employer type A: Open B: CTNM C: CTFA D: Winding up
College or education institution 10% 1% 0% 0%
Government / public body 0% 0% 1% 0%
Limited liability partnership 0% 1% 1% 7%
Other 8% 10% 7% 5%
Overseas Company 0% 0% 0% 5%
Partnership 0% 0% 0% 0%
Private limited company 57% 49% 53% 48%
Public limited company 22% 37% 35% 34%
Registered charity 3% 2% 2% 1%
Sole trader 0% 0% 0% 0%
Total 100% 100% 100% 100%

Part 3 funding

Figure 6: Estimated Part 3 funding figures as of 31 March 2022 for schemes in surplus and deficit by scheme status (excludes schemes winding up)

Figure 6 data: Data underlying figure 6, pertaining to Part 3 funding figures by scheme status

Status Assets (£bn) Part3 Liabilities (£bn) Surplus (Deficit) (£bn)
A: Open 321.84 320.536 1.304
B: CTNM 901.746 895.727 6.019
C: CTFA 584.455 574.205 10.251

Table 10: Estimated funding figures as of 31 March 2022 for schemes in deficit by status (excludes schemes winding up)

Status Assets (£bn) Part 3 Liabilities (£bn) Surplus (Deficit) (£bn)
A: Open 152.485 165.185 -12.699
B: CTNM 422.984 453.815 -30.83
C: CTFA 194.716 213.797 -19.08
Total 770.186 832.796 -62.61

Table 11: Estimated funding figures as of 31 March 2022 for schemes in surplus by status (excludes schemes winding up)

Status Assets (£bn) Part 3 Liabilities (£bn) Surplus (Deficit) (£bn)
A: Open 169.355 155.351 14.004
B: CTNM 478.762 441.912 36.849
C: CTFA 389.739 360.408 29.331
Total 1,037.86 957.671 80.184

Table 12: Number of schemes by estimated funding level as of 31 March 2022 and status (excludes schemes winding up)

Status Less than 60% 60% to less than 80% 80% to less than 100% 100% or greater
A: Open 1 35 157 294
B: CTNM 32 115 783 1,031
C: CTFA 52 287 1,096 1,240
Total 85 437 2,036 2,565

Figure 7: Estimated Part 3 funding figures as of 31 March 2022 by membership group (excludes schemes winding up)

Figure 7 data: Data underlying figure 7, pertaining to Part 3 funding figures by membership group

Membership group Assets (£bn) Part3 Liabilities (£bn) Surplus (Deficit) (£bn)
A: 2 - 99 18.687 18.688 -0.001
B: 100 - 999 158.646 160.914 -2.268
C: 1,000 - 4,999 308.348 307.838 0.511
D: 5,000 - 9,999 217.918 217.925 -0.006
E: 10,000 + 1,104.44 1,085.10 19.339

Table 13: Number of schemes by membership group and estimated funding level group as of 31 March 2022 (excludes schemes winding up)

Membership group Less than 60% 60% to less than 80% 80% to less than 100% 100% or greater
A: 2 - 99 44 170 695 961
B: 100 - 999 34 208 912 1,074
C: 1,000 - 4,999 6 42 303 345
D: 5,000 - 9,999 1 10 67 76
E: 10,000 + 0 7 59 109
Total 85 437 2,036 2,565

Public service defined benefit schemes

Figure 8: Balance of membership types in public service schemes

Figure 8 data: Data underlying Figure 8, pertaining to the balance of membership types in public service schemes

Membership Type Memberships
Active 6,831,364
Deferred 4,777,898
Pensioner 5,599,040

Figure 9: Comparison of balance of membership types – public service and private DB / hybrid

Figure 9 data: Data underlying Figure 9, pertaining to the balance of membership types in public service schemes

Type Active Deferred Pensioner
Public service 6,831,364 4,777,898 5,599,040
Private sector 785,744 4,743,815 4,266,879

Glossary

Accrual

Accrual is the build-up of an active scheme member’s pension benefits or entitlements in a DB pension scheme.

Active members

In a DB scheme these are members of the scheme who are current employees and accruing benefits.

Actuarial or funding valuation

A comparison by the actuary of the value placed on scheme assets with the TPs and an assessment of any future contribution requirement. Calculation of the TPs is usually based on full member-by-member data.

Deferred members

Deferred members are members of pension schemes who have accrued rights to pensions that will come into payment in the future but who are no longer accruing benefits in the scheme. Also known as members with preserved pension entitlements.

Defined benefit (DB)

A defined benefit (DB) pension is one in which the rules of the scheme specify the rate of benefits to be paid. The most common DB scheme is a final salary scheme in which the benefits are based on the number of years of pensionable service, the accrual rate and the final salary. An alternative to the final salary scheme is the Career Average Revalued Earnings (CARE) scheme, which is also a DB scheme.

Effective date (valuation date)

An actuarial valuation or an actuarial report considers the funding of a scheme as at a particular date, known as the effective date. The effective date will be earlier than the date on which calculations are done. The effective date of a scheme’s first Part 3 valuation cannot be before 22 September 2005.

Funded (or unfunded) scheme

A funded scheme is one in which benefits are met from a fund built up in advance from contributions and investment income. Such schemes have assets, even if these are not sufficient to meet all their liabilities, by contrast with unfunded schemes, in which liabilities are not underpinned by assets.

Hybrid scheme

A hybrid scheme is an occupational pension scheme where members have either a choice, or mixture, of DB and DC pension entitlements. In a ‘pure’ hybrid arrangement, members receive benefits that are a mixture of DB and DC. In a ‘mixed hybrid’ scheme, there are separate DB and DC groups of members (often organised in separate sections of the scheme).

Occupational pension schemes

An occupational pension scheme is an arrangement (other than accident or permanent health insurance) organised by an employer (or on behalf of a group of employers) to provide benefits for employees on their retirement and for their dependants on their death. They are a form of workplace pension. Occupational pension schemes for private sector employees are also referred to as trust-based schemes.

Part 3 valuation or scheme funding valuation

An actuarial valuation meeting the requirements of Part 3 of the Pensions Act 2004 concerning the funding of DB pension liabilities, which apply to any actuarial valuation received by trustees (on or after 30 December 2005) that is based on an effective date of 22 September 2005 or later.

Pensioner members

Pensioner members are members of pension schemes who are receiving pensions or income withdrawals, sometimes known as beneficiaries.

Pension Protection Fund (PPF)

A corporate body established under the Pensions Act 2004. The PPF was set up to provide compensation to members of eligible DB pension schemes, when there is a qualifying failure event in relation to the employer, and where there are insufficient assets in the pension scheme to cover the PPF level of compensation.

Public service pension schemes

These are pension schemes within the meaning defined in Section 318 of the Pensions Act 2004. These are schemes established under the Public Service Pensions Act 2013 Act, new public body pension schemes and other statutory pension schemes which are connected to those schemes. It does not apply to schemes in the wider public sector, nor to any scheme which is excluded from being a public service pension scheme within the meaning of the Pensions Act 2004. Substantially, these are the schemes providing pension benefits for civil servants, the judiciary, local government workers, teachers, health service workers, fire and rescue workers, members of police forces and the armed forces.

Technical provisions [liabilities] (TPs)

The liabilities or funding measure used for the purposes of Part 3 valuations (see above). The ‘TPs’ are a calculation undertaken by the actuary of the assets needed at any particular time to make provision for benefits already considered accrued under the scheme using assumptions prudently chosen by the trustees – in other words, what is required for the scheme to meet the statutory funding objective. These include pensions in payment (including those payable to survivors of former members) and benefits accrued by other members and beneficiaries, which will become payable in the future.

The Pensions Regulator (TPR)

A corporate body established under the Pensions Act 2004. The UK regulator of work-based pension schemes, a non-departmental public body established under the Pensions Act 2004.

Appendix

Appendix 1: Percentage of memberships in data set absent from the Purple Book, by status

% of memberships Open CTNM CTFA Winding up
In Purple Book 20.9 37.8 33.5 0.3
Not in Purple Book 0.1 6.1 0.9 0.4

Appendix 2: Percentage of assets in data set absent from the Purple Book, by status

% of assets Open CTNM CTFA
In Purple Book 17.7 48.2 31.8
Not in Purple Book 0.1 1.6 0.5