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Final salary pensions close at record rate

Money

Final salary pension schemes have closed to new members at the fastest rate on record, according to research carried out by the National Association of Pension Funds.

A survey of 280 NAPF members, covering 1,018 pension schemes with nine million members, reveals just 13 per cent of final salary schemes were open to new staff in 2012, compared with 19 per cent in 2011.

This is the steepest fall since the trade body started tracking final salary membership in 2005, when 43 per cent of schemes were open to new members.

Of those final salary schemes that remain open to new members, some 46 per cent have plans in place to close to new recruits and offer a defined contribution pension instead.

Similarly, some 29 per cent of schemes which are closed to new members but open to future contributions from existing staff either expect to cut accruals, increase contributions or close altogether in the future.

NAPF chief executive Joanne Segars says: “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. Those starting a new job in the private sector have next to no chance of getting a final salary pension.

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

AWD Chase de Vere head of communications Patrick Connolly says: “This is not surprising. Outside of the public sector final salary schemes have been dying a death for a number of years.

“Rather than being a slow, lingering death it seems that it is now happening rather quickly.”

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