Pension plans close at fastest rate
Firms have closed final salary pension schemes to new staff at the fastest rate on record, new research has revealed.
The National Association of Pension Funds (NAPF) said only 13% of final salary pensions were open to new joiners last year, a fall of a third from 2011.
It was the biggest reduction since comparable figures started in 2005, when almost half of private sector schemes were open to all employees.
The association's annual survey also showed that the defined benefit funds were increasingly closing to workers already in them. Higher liabilities created by quantitative easing and low gilt yields have prompted a "barrage" of closures, said the NAPF.
Chief executive Joanne Segars said: "The pressures on final salary pensions have proven too great for many businesses. The growing liabilities fuelled by quantitative easing will have been a factor behind the record hike in closures.
"Those starting a new job in the private sector have next to no chance of getting a final salary pension. What was once the norm is now a very rare offer, and those who are currently saving into one may find it gets closed."
Ms Segars said private sector pensions were "far from finished", with more than two million workers still saving into one. She said: "It is essential the Government shows them more support in managing some extremely testing economic circumstances."
The new automatic enrolment system will bring millions of workers into a new breed of pension that will dominate in the private sector, the association added.
Paul Kenny, general secretary of the GMB union, said: "The recently announced state pension reforms will cost private sector employees about £1 billion in extra tax and will further accelerate the juggernaut of final salary closures.
"Many employers aren't interested in providing for a dignified retirement for their workers. The new requirements for automatic enrolment will provide a minimum framework, but this won't be enough."