Pensions gloom for consumersFinal salary schemes to close to existing workers
25 January 2009
There was more bad news on Friday with the release of a survey that showed that workers could be forced out of final salary pension schemes as 25 firms plan to close them to existing members.
A survey by the NAPF has found that a quarter of members which responded said they would stop current contributors saving into the schemes in the next five years.
The majority of the 8,000-plus existing final salary schemes are already closed to new members but if the plans are shut down, savers will be forced put their money into riskier, stock-market linked schemes.
Payments they have already made will be protected, but they will lose the guarantee of a pay-out to match their salary.
Rentokil is among a small number of firms who have already closed their final salary scheme to existing members.
Pensioners may struggle
Investments expert Ros Altman told the BBC: "This is the death knell for the final salary pension scheme. Employers cannot afford to fund this long-term commitment any more."
Howard Neville, who had his final salary pension scheme transferred to a stock-market linked investment, added: "It has made me absolutely sick with worry. And to be perfectly honest I feel like I've been a bit of a mug."
Joe Harris, National Pensions Convention general secretary said: "If we are serious about giving everyone a decent income in retirement, we must end the over-reliance on private occupational pension schemes which are governed by a volatile stock market.
"The pensioners of tomorrow - just like today's pensioners - need security and that will only come when we recognise, like our European counterparts, that the state is best placed to provide it through a living state pension that ends poverty in old age."
For daily consumer news, subscribe to the Which? news RSS feed here. If you have an older web browser you may need to copy and paste this link into your newsreader: http://www.which.co.uk/feeds/reviews/news.xml . Find out more about RSS in the Which? guide to news feeds.