Final salary pension closes at record high

Final-salary schemes are down by 19per cent in 2011.

17:43 29 January 2013

According to National Association of Pension Funds, the number of private sector pension scheme has declined by 12per cent in 2012. It was also revealed that in 2011, the number of new final-salary scheme was 19per cent lower compared to previous year.

In addition, those schemes that were closed to existing staff were down by 23per cent. NAPF chief executive Joanne Segars explained the reason for the decline.

She said: "The pressures on final-salary pensions have proven too great for many businesses.

 

“The growing liabilities fuelled by quantitative easing will have been a factor behind the record hike in closures.”

 

Ms. Segars added: "What was once the norm is now a very rare offer. And those who are currently saving into one may find it gets closed.”

 

NAPF predicts that due to increasing cost of pension regulation, unstable economic condition, and longer life span, more schemes will be closed in the coming years.

It also predicts that nearly half of employers who are now offering pension schemes today will be closed and will be replaced with defined-contribution scheme.