More closures for pension schemes predicted

04/01/2008

The latest annual survey of UK pensions schemes by the National Association of Pension Funds (NAPF) has revealed that, despite a new equilibrium after many years of change, more final-salary pension schemes are likely to close to new members in the next five years.

The 2007 survey was based on the responses of 369 NAPF fund members with 8.7 million members and £500 billion under management, thereby providing a comprehensive picture of the UK pensions landscape.  

 

It found 31% of final-salary schemes were still open to new members, but 15% of open schemes were expected to close to new joiners in the next five years. And a further 6% of all schemes will close even to existing staff, bringing the proportion of schemes covered in the survey that are closed to all employees to 11%.
 
However, the NAFF said that the impact of pension reform on today’s workplace pensions should not be under-estimated. Their survey showed that 75% of schemes believe they will be affected by the 2012 pension reforms (which include the introduction of Personal Accounts), and they will have to make some changes to their schemes to comply with the new rules - for example, auto-enrolment.
 
NAPF Chief Executive, Joanne Segars, said: "While the overall picture shows that the pensions landscape is stable, the operating environment for occupational pensions is tough and likely to get tougher. The Government must use the Pensions Bill to bolster current workplace pensions to ensure their future existence for today’s and tomorrow’s workers.

"The deregulation proposals are a good start, but they are only that. More must be done to offer support to employers offering good workplace pensions to ensure they remain open and can afford to invest more than the minimum required under the coming Personal Accounts system.”

The closure of final-salary pension schemes continues to be a controversial subject, as shown by the recent strike threat by staff at BAA where trade union members have been upset about the closure of their scheme to new joiners.

 

And no doubt the story is not over yet ...