Pensions reform needed
ONLY ONE in five defined benefit pension schemes offered by companies is still open to new members, research showed.
Four out of five of the private sector schemes, which include final salary pensions, are now closed to new entrants, according to the Association of Consulting Actuaries (ACA).
But the group said with defined benefit schemes offered by public sector employers remaining open, there were now five people working in the public sector who belonged to one of the schemes, for every one in the private sector.
Overall it estimates there are now just 900,000 private sector workers who belong to a defined benefit scheme, compared with more than five million in the public sector.
The group said contributions paid into defined benefit schemes by both companies and staff had reached record levels during 2007.
But it warned that payments into defined contribution schemes had levelled off at around a third of this level.
ACA warned that lower levels of contributions, combined with falling annuity rates due to increased life expectancy, as well as investment market volatility was of “mounting concern”.
The group said radical pension reform was needed, but that the Pensions Bill, which is due to have its second reading next week, did not go far enough.
