Supplementary Pension Coverage in Britain

Abstract The 1986 Social Security Act introduced far‐reaching changes to the supplementary pension environment in Britain, encouraging the growth of defined contribution pension plans and especially personal pensions. This paper examines the pattern of supplementary pension coverage of employees in Britain five years after the implementation of the Act, using cross‐sectional data from the Family Resources Survey 1993–94. Two‐thirds of employees in Britain are covered by private contracted‐out pension scheme. Employer‐provided defined benefit pension schemes remain the dominant type of supplementary pension scheme. The growth of personal pension plans is more marked among manual, less‐skilled, workers in smaller establishments. The paper concludes that, in the absence of further pension reform, adverse labour market conditions will exert downward pressure on private pension coverage. JEL classification:I38, J32, J38.