More final salary pensions closed
Thursday 15 December 2011
Almost a quarter of private sector final salary pension schemes have been closed to all staff, a report found today.
The National Association of Pension Funds (NAPF) found that 23% of schemes have been shut to new staff as well as to future contributions from those already in the pension, an increase of nearly a third from 17% of schemes found to be closed a year ago.
The NAPF said employers were trying to manage risks and rising costs as final salary pensions have come under strain from increased longevity, poor investment results and red tape.
Joanne Segars, NAPF chief executive, said: "The private sector is seeing a seismic shift in its pensions, and more change is certain.
"Final salary deals are coming off the table and are either being watered-down or replaced altogether.
"Demographic and financial pressures mean businesses are struggling to afford these pensions. Many firms are trying to get a grip on the risks and rising costs by freezing the fund to both new and existing staff.
"While it is difficult to be exact, we estimate up to a quarter of a million have been moved out of their final salary pension over the past three years."
The survey, which covered around 1,500 schemes, found that more people will be "frozen out" in the near future.
Among those pension schemes which are closed to new staff but remain open to existing staff, just under a third are expected to close the scheme altogether in the next five years.
Around one in 10 (11%) of schemes plan to keep the existing defined-benefit pension structure, but will make it less generous, by moving from a final salary to a career average structure, for example.
Despite pressures on household budgets, contributions into pensions have remained broadly stable, the survey found.
Ms Segars said: "People will often find that the replacement pension on offer is a good one. It's encouraging to see that, despite the harsh economic climate, payments into defined contribution pensions by staff and their employers have remained stable.
"Whatever the type of pension, the main thing is to get more people saving. The UK simply isn't salting enough away for its old age."
Local government pension funds were also asked about people choosing to leave their pension, in the light of debate on public sector pension reform as well as squeezed household incomes. The report found that 39% said that opt-out rates had increased this year.
Figures released this week by the Pension Protection Fund (PPF) showed private sector final salary pension schemes are facing a record deficit of £222.1 billion.
The latest figure is the largest deficit since the records began in March 2003, but the PPF cautioned that direct comparisons are affected by changes made to its calculations from April.
- 1 Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
- 2 Oil tanker with $100 million cargo goes missing off Texas coast
- 3 George Galloway left with severe bruising after attack in Notting Hill by man 'shouting about the Holocaust'
- 4 Lady al-Qa’ida: On the trail of Dr Aafia Siddiqui, the world’s most wanted prisoner
- 5 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
- < Previous
- Next >
iJobs Money & Business
Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...
£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...
£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...
£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony