A record number of final salary schemes have closed to future contributions from existing members, according to the National Association of Pension Funds (NAPF).
The NAPF’s Annual Survey showed that one in five (17%) schemes have shut their final salary pension to both new and existing members, representing a rise of 7% from 2009. Just 21% of private sector schemes are now open to new joiners, compared to 88% ten years ago.
Joanne Segars, chief executive of the NAPF, said: “The pressures on final salary pensions are relentless, and their rate of decline seems to be shifting into a new gear. 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.”
A third (33%) of schemes are planning changes affecting their existing members, including cutting benefits or migrating staff to a defined contribution (DC) pension.
When asked about the upcoming 2012 pension reforms, 51% said they would auto-enrol their employees into existing pension schemes at current contributions. However, 9% said they were planning to cut contributions and level down to the minimum stipulated under the reforms.
Meanwhile, the average employer contribution into DC schemes rose from 11.5% in 2009 to 12% in 2010 and the proportion of contract-based schemes outnumbered that of trust-based schemes for the first time in the history of the survey.
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