NAPF issues pensions warning to Government
A report by the National Association of Pension Funds (NAPF) has found that just 23% of final salary pension schemes in the private sector are open to new members, compared with 28% a year earlier.
As a result of the findings, the NAPF has issued a warning to the Government to introduce measures to help reduce deficits and the size of pension liabilities.
Commenting on its findings, Joanne Segars, NAPF chief executive, said: Pension funds want to see decisive action by Government to support workplace pensions.
“They believe the most effective way government could support pension funds would be to issue more long-dated and index-linked gilts, with 82% saying this would be either very or quite helpful. This single measure would help reduce pension fund deficits and liabilities,” adds Ms Segars.
The Office for National Statistics (ONS) recently conducted its annual survey of pension schemes and found that the fall in the number of people paying into private sector final-salary pension schemes had slowed down in the past year.
Meanwhile, the active membership of these schemes marginally fell from 2.7 million in 2007 to 2.6 million in 2008, said the ONS.
Over the last year, a growing number of blue chip companies have announced the closure of their schemes to existing members.
Telecoms company Vodafone announced yesterday it is to close its final salary pension scheme to 4,000 current employees.
Earlier this month, sugar firm Tate & Lyle and newspaper publisher Trinity Mirror became the latest firms to close their final-salary pension schemes.
Tate & Lyle blamed the decision on a hike in the scheme’s deficit to £110 million which will see the scheme close to half of its UK workforce next April.
Trinity Mirror, meanwhile, which closed its final salary scheme to new joiners in 2003, said its pension deficit increased by £68.6 million in the first half of the year to £275 million as at the end of June.
In September, Dairy Crest, which is one of the UK’s largest milk firms and makes brands such as Country Life and Clover butter, said it would close its final salary pension scheme to existing members, having closed the scheme to new employees in 2006.
This followed announcements from other blue-chip companies including banking giant Barclays, oil firm BP and supermarket Morrisons, who have all announced plans to close their final salary schemes.
In April, the British subsidiary of the US insurance broker Aon said it planned to reduce its pension contributions to cut its costs - saying it needed to be “protected in challenging conditions”.
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