Private sector defined contribution (DC) assets remained unchanged over Q1 2022, despite a record increase in active membership of 290,000, figures from the Office for National Statistics (ONS) have revealed.

The latest ONS data showed that private DC active membership rose by 290,000 from 31 December 2021 to 31 March 2022, while private and public sector defined benefit (DB) and hybrid (DBH) active membership fell over the same period by 90,000 and 60,000, respectively.

According to the ONS, this change in private sector DC active membership represents the greatest increase in active members since the beginning of the survey.

In addition to this, total contributions, excluding deficit reduction contributions, increased by 15 per cent from Q4 2021 to Q1 2022, with contributions exceeding benefits by £2.7bn in Q1 2022.

Despite these increases, the ONS update found that both DC and DB private sector scheme assets remained relatively unchanged, while public sector DBH schemes total assets fell by 5 per cent from 31 December 2021 to 31 March 2022.

Given that the active membership of private sector DC schemes experienced its largest increase this quarter, the ONS stressed that investments for this scheme type performed "relatively poorly", along with public sector DB and DBH schemes.

In particular, the ONS noted that international equity markets were turbulent over Q1 2022 in response to the beginning of the conflict between Russia and Ukraine, with the FTSE all-share index dropping by 8 per cent by 7 March 2022.

More broadly, the update revealed that there has been a 32 per cent decrease in conventional gilts with 25 years and over maturity in private sector DBH schemes, but
corresponding increase in index-linked gilts, which are considered less risky in light of rising inflation.

Commenting on the latest figures, Broadstone head of pensions and savings, Rachel Meadows, emphasised that while the data paints a "positive picture" for the start of the year, there are concerns that savers could start pausing pension contributions amid the cost-of-living crisis.

"It means that in a years-time, the encouraging sheen on this data could look very different," she continued.

“Inflationary pay rises must also not be allowed to mask employees reducing the percentage of their salary into their pension which could have a negative long-term impact.

“Opting out of their pensions may provide some short-term relief for those facing significant income pressures – and may be the right option for many – but it will significantly reduce total wealth accumulation every month, exacerbated by lost compound investment growth.”

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