UK – Companies in the UK are finding it increasingly difficult to provide occupational pension schemes, reveals the National Association of Pension Funds’ 28th annual survey.

In its survey of 970 of the UK’s major employers’ pension schemes, the NAPF revealed that 95% of schemes have said that providing an occupational pension scheme is taking up more company resources than five years ago. Of those surveyed, 92% expected this trend to continue over the next five years.

Says NAPF chief executive, Christina Farnish: “There is a real danger that as the cost of provision rises, the level of provision will fall.”

“Lower investment returns and longer life expectancy are contributing to the cost pressure felt by employers now with regards to pension provision,” adds Farnish.

The survey also highlights the increasing number of companies that are closing final salary schemes. In 2002, 84 final salary schemes were closed to new staff, compared to 46 in 2001. This figure looks set to increase further as a result of the new accounting standard FRS17, which 86% of those surveyed said would make it less attractive to employers to offer a final salary scheme.

The average contribution to money purchase schemes is half that for final salary schemes, which could lead to a damaging decline in saving through workplace pensions, says the NAPF.

Many schemes, however, were revealed to be well funded, and 24% had taken contribution holidays in 2002.

The results of the NAPF survey come ahead of the release of the UK government’s green paper on pension reform.

Says Farnish: “We hope that the government will produce proposals in the Green Paper which lead to a simpler pensions landscape, and which can boost both confidence and security in the pensions system.”