The number of people belonging to a pension scheme has dropped amongst the UK’s 35.4 million workforce, according to the Office of National Statistics (ONS).

Across the board, membership fell from 40% of workers in 2003/04 to 39% in 2004/5. One of the main reasons for this was the decline in workers belonging to a final salary scheme, a pension fund which guarantees a percentage of final salary as retirement income.

Many employers now regard final salary schemes as too expensive and too risky to operate. Even employers that have traditionally run final salary schemes are closing them to new members, often replacing them with cheaper money purchase plans that depend on investment performance for their final returns. By its nature a pension fund built up this way cannot guarantee a fixed sum.

TUC general secretary, Brendan Barber, said: “At a time when we can expect to live longer, many employers have walked away from providing a decent pension.

“And while it’s welcome that the Government is to force all employers to contribute to pensions, that will not start for another six years. In the meantime, today’s older workers without pensions will have to work longer or face near-poverty living standards in retirement.”