Contributions to pension schemes have fallen sharply since money purchase plans, which invest planholders’ cash on the stock markets and do not guarantee a set retirement income, have become the main retirement vehicle for workers, according to the Office for National Statistics (ONS).

In 2006, 40% of members of such schemes saw less than 8% of their salaries being paid in as total contributions. This compared to a combined 20% contribution rate for members of traditional final salary schemes, which guarantee pensioners a set proportion of their salary at their retirement date.

In 2005, the average company money purchase pension scheme – or defined benefit scheme – received total contributions of only 9% of salary.

Nigel Stanley, head of campaigns at the TUC, said: “This confirms employers’ retreat from pension provision, particularly the valuable final salary kind.

“An awful lot of people at work today face big cuts in their living standards when they retire, particularly those who are now too old to build up decent savings when personal accounts start in 2012.”

The ONS also found that in 2005 more than three-quarters of employers paid in at least 12% of salaries into their staff’s final salary schemes, a similar proportion paid less than 8% into their staff’s money purchase pensions.