The report highlights the that the trend of employees moving away from DB schemes is continuing at a substantial rate, with a general drop in employees paying into a pension scheme.

DB schemes are those which specify the rate of benefits to be paid with the most common being one in which the benefits are based on the number of years of pensionable service, the accrual rate and the final salary.

This follows an earlier report from Metlife Assurance that the projected number of employees contributing to DB schemes will drop from 1.6m, as it currently stands, to 1m in 2020.

The number of people contributing to personal pensions continued to fall, from 6.4m in 2008/9 to 6m in 2009/10.

According to the OECD pension model, the UK has one of the largest pension gaps of OECD countries, at 25%. This means that employees will need to have relatively high future private pension contribution rates to close the gap.

However, the report also highlights that private pension scheme membership is also down for the first time since records began in 1997.

48% of UK employees were members of an employer-sponsored pension scheme last year, falling below 50% for the first time since 1997.

The report also shows that in 2010 the average employer contribution rate for private sector DB occupational pension schemes was 15.8%, compared with 6.2% for defined contribution occupational schemes.

Starting in October 2012, employers will have a duty to automatically enrol all eligible employees into a qualifying workplace pension and contribute on their behalf.

Additionally, a fall occurred in the number of self-employed men working full-time in Great Britain belonging to a private pension scheme, falling to 37% in 2010 from 64 per cent recorded in 1998/9.

There is also a marked difference in the way an employee will save for retirement depending on how much they earn.

The report shows that that those full-time employees earning higher weekly earnings are more likely to belong to an employer-sponsored pension, compared to those that do not earn a higher weekly amount.

With a lower total pension provision than many other OECD countries, a pension’s gap has been created. The gross replacement rate of mandatory pension schemes for average earners include highs of over 95% in Iceland and Greece but is 32% in the UK.

This does not take into account the changes made in the Pensions Act 2011, moving the indexing of state pensions from the Retail Price Index (RPI) to the Consumer Prices Index (CPI).