Employees in defined contribution schemes are likely to receive pensions 30% smaller than those in final salary or defined benefit schemes according to research by KPMG Pensions.
The research which covers 74 UK companies suggests almost half of those running DC schemes are making contributions of 5% or less while in a DB scheme, a typical company makes contributions in excess of 10%.
The warning comes as more companies are closing final salary schemes either altogether or to new entrants. In February the frozen food retailer Iceland and accounting company Ernst & Young announced they were terminating their DB plan.