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Pensions gloom for consumers

Final salary schemes to close to existing workers

senior people in jacuzzi

You can swerve right away from family-friendly hotels

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.”

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