Pension contributions declined during recession
The arrival of the recession in 2008 resulted in a drop in overall pension contributions, the first since records began in 1995.
Official figures from the Office of National Statistics (ONS) have revealed that contributions from both employers and employees dropped from £86 billion in 2007 to £82 billion in 2008.
The principal cause for the deterioration was a decline in the amount of money some employers made on behalf of employees.
The ONS said: “The fall was driven by a decrease in employer contributions to funded occupational pension schemes, which fell from £37 billion in 2007 to £33 billion in 2008 as company finances came under pressure at the start of the recession.
“Employer contributions to personal pensions and to unfunded occupational pension schemes rose in 2008, but not enough to prevent a drop in total contributions.”
The recession contrasted sharply with the years leading up to the economic downturn.
Between 2001 and 2007, the collective sums that employers and employees contributed to their pension schemes ballooned from £49.6 billion to £86 billion.
The majority of the increase came from higher employer contributions to funded company schemes.
“This was likely to have been associated with the requirement to finance deficits in private sector defined benefit schemes,” added the ONS.
The recession seems to have dampened enthusiasm among employees for contributing to their pensions savings too.
Individual payments slid from £11 billion in 2007 to £10.3 billion in 2008.