New staff miss out on final salary schemes - NAPF
UK - Only 19% of UK employers offer a final salary pension scheme to new employees according to a research published today by the NAPF.
The findings, announced during the NAPF annual conference in Glasgow, show that over 40% of companies operating a final salary scheme had closed them to new member within the last 12 months.
The research also points out that one in four companies had increased employer contributions in order to maintain funding levels.
Participants in the survey, which looked at more than 250 companies, said that the key reason for making changes to scheme design was the economic climate. They also mentioned the need to control risk to the company and secure optimum benefit for employees at affordable costs as other important factors.
Christine Farnish, NAPF chief executive said: "Traditional final salary pensions have undoubtedly become highly expensive to provide not just because of the economic climate.” However she added that today's market conditions had brought home the true cost of pensions which were masked during the bull years.
"The proposals of the government's Green Paper are unlikely to abate this sea change in the pattern of funded pension provision," Farnish added. "The government is silent in incentives and stripping away red tape while clinging on to over-complex state system will make little difference."
During her presentation at the conference, Farnish called on the government to accept the huge benefits that a wide penetration of workplace pensions could bring and to do more to incentivise broader provision.
"We need measures to help firms modernise their arrangements and to encourage them to bring in plans for today's and tomorrow's workers that don't load all the cost and risk onto consumers."