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&#39Shutting down final-salary schemes doesn&#39t worry staff&#39

A tidal wave of companies closing final-salary schemes to new members will gather force as firms realise that staff retention is not affected, the Pensions Policy Institute conference was told last week.

Legal & General pensions strategy director Adrian Boulding said employers would find that he savings made by closing defined-benefit schemes to new members would not be outweighed by increased costs from increased staff turnover.

Boulding said pensions were less important to companies as a staff incentive than the cash that it costs to provide them.

Labour MP Frank Field predicted that even the best employers&#39 final-salary schemes schemes would close to new members, creating a “mega-crisis” for the country&#39s pension provision.

Boulding said: “Having closed to new entrants, companies find it surprising they do not have any difficulty retaining staff. Cash is king and pensions are second-class. After five to seven years, employers find they have more non-scheme members than scheme members. If the scheme closes at that point, members can find their pension rights are not legally enforceable against the company.”

Field said: “Global competition means that firms will look at their balance sheets and see the true cost of final-salary schemes. Many companies will close schemes to existing members to stave off the closure of the company itself.”

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Auto-enrolment: pay attention or pay the price

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As a chief executive officer of a business in the financial services sector, I have been dealing with the introduction of auto-enrolment for our clients for some time, but I can also speak from an employer’s point of view, having to go through the process ourselves.

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