UK - The majority of employers in the UK still contribute to pensions schemes but they are restricting final salary schemes to existing staff and are introducing money purchase schemes with lower rates of contribution to new employees, according to a new report.

Research by the Chartered Institute of Personnel and Development added that many employers fail to communicate to staff about their pension schemes on an on-going basis. A “significant “ minority of employers plan to raise their retirement age over the next two years.

The news follows last week's announcement by consulting firm Hewitt Bacon & Woodrow that pension deficits at top UK firms had halved.

‘Cafeteria benefits’ - giving employees a choice over the mix of cash and benefits they receive - are becoming “ increasingly popular among employers.”

A large increase in the number of organisations carrying out pay audits was also detected in the past year and the trend is expected to grow in 2004.

Hundreds of workers demonstrating over lost pensions brought traffic to a halt in central London last week. The opposition Conservative Party’s pension spokesman David Willetts said:

“I wrote to the Secretary of State a year ago offering cross-party co-operation to tackle the problems of workers who found they had lost everything when their company pension scheme was wound up.” A year, he said, the government had done nothing.

A report by the economics affairs committee in parliament’s upper house, the House of Lords, has also called for changes. Under its proposals, the system would become fairer if state pensions were based on years of residency, and not national insurance payments.