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Big rise in firms shutting FS schemes

The number of companies cutting costs by closing final-salary schemes to new members nearly doubled in the last year, according to the National Association of Pension Funds&#39 annual report.

This year, out of the 970 firms surveyed, 84 companies closed their final-salary schemes compared with only 46 companies in 2001.

The survey identifies that such a move makes an average 6 per cent saving as the average contribution by private sector employers into money-purchase schemes is 6 per cent of salary compared with 12 per cent for final-salary schemes.

A third of schemes narrowed their eligibility criteria in 2002 compared with one in 10 in 2001, with 95 per cent of schemes saying that providing an occupational pension takes up more company resources than it did five years ago.

NAPF chief executive Christine Farnish says: “This survey highlights the pressures on employers with workplace pension schemes and underlines the importance of next week&#39s Pensions Green Paper. There is a real danger that as the cost of provision rises, the level of provision will fall. The atmosphere in which companies provide pensions for their employees is getting thinner.”

•Terry Faulkner is to become the new chairman of the NAPF next May when present chairman Peter Thompson steps down. Faulkner is currently chairman of the NAPF benefits council, a director of the NAPF and a trustee of the NAPF pension scheme. He is also group pensions and benefits manager of Rexam.

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