Final salary schemes under increased threat
ONE in four large companies expect to close their final salary pension schemes to their existing members in the next few years, a new survey claims.
The National Association of Pension Funds (NAPF) says while closing schemes to new members is already common practice, it now expects more businesses to bar current contributors too.
The NAPF has found 25 of the 100 firms which replied to its study expected to close their schemes.
Final salary schemes are valued for offering guaranteed benefits to members, but are facing pressure from plunging stock markets, falling interest rates and growing life expectancy.
The most recent estimate of total UK company pension deficits is nearly £200bn.
Many final salary schemes have already closed to new recruits - with not much more than 25% of private sector employers still holding them open.
The NAPG survey says closing schemes which are still open to new members will become more likely because of the credit crunch.
Joe Harris, general secretary of the National Pensioners Convention, said a "living state pension" was the best security in old age.
He said in a BBC interview: “If we are serious about giving everyone a decent income in retirement, we must end the over-reliance on private occupational pension schemes which are governed by a volatile stock market.”
