Actuaries see “disturbing” UK final salary data
UK – The Association of Consulting Actuaries says that almost three-quarters of UK final salary pension schemes are now closed to new entrants – a state of affairs it calls disturbing.
The ACA surveyed 336 randomly selected firms and found that 72% of them have now closed their final salary schemes. Seventeen percent of employers have closed their final salary schemes in the last six months, the ACA said.
“The flight away from final salary arrangements has accelerated disturbingly over the last few months,” said ACA chairman Gordon Pollack.
He called on the government to do more to support occupational pension provision, saying the government’s reform proposals – unveiled in a Green Paper last December – “must be improved upon”.
He said the removal of compulsory Limited Price indexation and spouses’ benefits could help matters.
“Better incentives too – tax or otherwise – to employers who offer an occupational scheme with a significant contribution need to be very seriously considered before the government’s revised proposals, following the consultation period, are published,” he said.
The survey found that 93% of respondents found the Green Paper “inadequate and will not encourage greater occupational pension provision”.
“It is time that ministers accepted the scale of the crisis and proposed reforms to stop final salary pensions from becoming extinct,” said David Willetts, the pensions spokesman for the opposition Conservative party.
The news comes as pensions consultancy firm Watson Wyatt has called for a debate about the role of the state in protecting the security of pension scheme members.
Watson also called for the abolition of state second—tier pension. “If there us no state second-tier pension, contracting-out will cease, and the links between state and occupational provision can be broken,” it said in a statement.
The firm also called for legislation enabling trustees to protect the interests of beneficiaries.