Final salary pension scheme closures on the up

| March 9, 2011
Final salary pension scheme closures on the up

According to the National Association of Pension Funds (NAPF), final salary pension scheme closures are on the increase.

These types of schemes are becoming significantly more expensive to operate and costs are likely to rise. As a result, the rate of decline appears to be picking up, said the NAPF.

The Association said 17% of schemes in 2010 were closed completely, up from 7% in 2009.

It added that the decline of final-salary schemes had entered a “new phase”, due to increasing longevity and inadequate investment returns.

Joanne Segars of the NAPF warns: “The rate of closures to new staff seems to have levelled off, but now those who are already in a final-salary pension increasingly find themselves being locked out.”

Around one third of companies still offering some final salary pensions are proposing changes in the short-term, this includes slashing benefits and moving staff to defined contribution schemes.

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