Rate of final salary pension closures at record rate

Final salary pension schemes are closing as rising life expectancies leave them too expensive to maintain. Half of UK firms will enrol their staff in existing pension schemes when the auto enrolment system is implemented next year. Almost a fifth of UK firms have closed their final salary pension schemes to existing and new members, according to the National Association of Pension Funds (NAPF). This marks a 7% and 3% increase from the figures recorded in 2009 and 2008 respectively. Rising life expectancy rates and unstable investment returns, which are making the final pay outs more costly than ever, were cited as reasons for the closures.

Final salary pension schemes scrapped by 2015?

A report on public sector pensions may result in changes being made to the current system to make it more affordable. Working for longer to generate a larger pension may become the norm if final salary schemes are abolished. Public sector employees may have to work longer for lower pensions, if recommendations advised in a new report are accepted by the government. An independent review led by Lord Hutton outlined that public sector pensions should be related to average salaries over a career instead of the final salary at the end of a person's working life. This would make schemes "sustainable and affordable in the future".