Private sector DB and hybrid schemes see rise in DRCs

However, ONS data also showed that public sector DBH schemes and private sector defined contribution schemes experienced growth during the period, of 6 per cent and 22 per cent respectively.

Private sector DBH schemes also saw direct investments fall by 3 per cent, from £1,124bn to £1,088bn, mainly due to a 16 per cent decline in cash and cash equivalents, from £87bn at the end of September 2020, to £73bn at the end of December 2020. 

Long-term debt securities also dropped by 1 per cent during this period.

Gross liabilities other than pension liabilities, and excluding derivatives, fell by 8 per cent, with repurchase agreements representing around 88 per cent of the gross non-pension liabilities.

Derivative contracts with a positive and negative value also fell by 5 per cent and 7 per cent respectively during Q4 2020.

The ONS data also showed that 68 per cent of private sector DBH employer pension contributions in Q4 2020 were deficit reduction contributions.

Private sector DRCs rose from £2.9bn to £6.2bn from Q3 to Q4 2020. Public sector schemes “continued to remain low” in Q4 2020, at £162m.

Employers’ normal contributions remained “relatively unchanged” for all three scheme types from Q3 to Q4 2020. 

Public sector DBH schemes saw an increase of 5 per cent, while private sector DBH schemes rose by 2 per cent, and private sector DC schemes fell by less than 1 per cent, the ONS data revealed.

The data also showed that employee pension contributions rose for all scheme types from Q3 to Q4 2020, with private sector DBH schemes registering a 24 per cent increase, while public sector DBH schemes and private sector DC schemes increased by 8 per cent and 1 per cent respectively.

The ONS said that while private DBH employee contributions have seen “a significant increase”, this is likely to have been caused by sample variability.