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June 23, 2009    

Survey reveals firms considering freezing final-salary pension schemes

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by Kay Murchie
Survey reveals firms considering freezing final-salary pension schemes

A survey by accountancy firm PricewaterhouseCoopers (PwC) has revealed more worrying news for the retirement prospects of Britons.

The survey by PwC, which polled 1,000 companies, established that 55 respondents are considering freezing their final-salary pension scheme for existing members within the next five years.

It appears the trend is growing after banking giant Barclays announced earlier this month it would be freezing its final-salary scheme to existing members.

Oil giant BP also said it would close its UK final salary pension scheme to new members from April next year, in a bid to cut costs.

Meanwhile, PwC’s survey, which included more than 30 FTSE 100 companies, indicated that 81% had already closed their defined-benefit scheme to new members of staff citing cost as the main reason.

Marc Hommel, partner and UK pensions leader at PwC, told the BBC that: “This survey is reinforcing that fewer and fewer people who work in the private sector in the UK can look to their employer for a good quality pension.”

“One of the big issues of the next generation is how are employers and government going to deal with the fact that people are not going to be able to afford to retire,” added Mr Hommel.

In related news, research by fund management group, Fidelity International, found that in order to live a comfortable retirement, Britons may find themselves working until they are 77 years of age.

According to fund management group, Fidelity International, those depending on company pensions, linked to stock market growth, will need to top up their pension considerably if they wish to retire at the traditional age of 65.

In a bid to encourage Brits to save towards a pension, the Government is to introduce Personal Accounts in 2012 which will be a state-sponsored pension arrangement.

Employees will be enrolled automatically, contributing 4% of their salary. The employer will pay 3% and a further 1% will come from tax relief.

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