Final salary pension schemes closed their doors at a record rate last year as the Coalition's money printing programme hit their finances.
Figures from the National Association of Pension Funds (NAPF) show that just 13 per cent of Britain's 6,000 final salary schemes remain open to new workers – a drop of one third from 19 per cent in 2011.
These generous defined benefit schemes were also closed to existing members at a rapid rate last year, with the number being shut climbing to 31 per cent last year, compared to 23 per cent in 2011.
Over the past few years major companies such as Shell, Unilever and Alliance Boots have closed their schemes and the trend is accelerating. The Royal Opera House is among those organisations which recently began a consultation to decide on whether to close its final salary scheme.
The Bank of England's quantitative easing (QE) programme has undermined these gold-plated retirement plans, which were already under pressure from red tape, poor investment returns and people living longer.
Joanne Segars, NAPF chief executive, said: "The pressures on final salary pensions have proven too great for many businesses. The growing liabilities fuelled by QE will have been a factor behind the record hike in closures.
"Those starting a new job in the private sector have next to no chance of getting a final salary pension. What was once the norm is now a very rare offer. And those who are currently saving into one may find it gets closed."
The state of private-sector pensions is in stark contrast to the public sector, which continues to operate a lot of final salary schemes, leading some critics to talk of a "pensions apartheid".
QE hurts all final salary schemes because the Bank of England uses the money to buy debt, which pushes up the price of government gilts. This creates lower returns, or yields, on pension funds' investments. It also affects the way pension liabilities are calculated, using a formula known as the discount rate. According to NAPF, the costs of running final salary schemes – including fees to fund managers – increased from £170 per member to £186 in 2012.
On a brighter note, total contributions from both employers and employees into cheaper defined contribution (DC) pensions rose to an average of 12.5 per cent of salary in 2012, above the 8 per cent minimum that auto-enrolment requires. This new law sees workers automatically placed into company pension schemes.
Ms Segars said: "We are in the midst of a pension regime change. Auto-enrolment will bring millions of workers into a new breed of pension that will come to dominate in the private sector. It is encouraging that savings into these pensions have reached a new high, despite the tough economic conditions."
Some industry-watchers remain concerned about DC schemes because the risk lies with the employee, not the employer, and returns can depend on the vagaries of the stock market. The Office of Fair Trading is investigating claims of high charges and low growth.