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Latest NewsPay & benefitsPensions

Private sector final salary pension closures continue to rise

by Personnel Today 27 Nov 2009
by Personnel Today 27 Nov 2009

The recession has continued to take its toll on private sector final salary pension schemes, with a number closing in the past 12 months, annual research reveals today.

The survey of 300 National Association of Pension Funds (NAPF) members – published a day after it was revealed that Vodafone planned to close its final salary scheme to about 4,000 existing staff – shows that 23% of schemes remain open to new members, compared to 28% a year ago.

Further changes are also likely as more schemes than before have indicated that they will change benefits in the near future to new employees and/or current scheme members.

However, contributions to defined contribution (DC) schemes have not been cut back as a result of the recession, the survey shows. Average contribution rates to DC schemes have remained stable and now stand at 11.5%. Additionally, 10% of schemes have suggested that they will increase contributions in future.

Uncertainty remains over the impact of the government’s 2012 pension reforms: 41% said they will maintain their scheme in its current form and auto-enrol their employees into it.

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However, the risk of ‘levelling down’ remains: 8% of schemes say they are planning to reduce their contributions in 2012.

A further 10% said employees who do not choose to join the existing pension will be auto-enrolled into Personal Accounts at the minimum level and a further 13% are proposing other changes, while 27% of schemes have yet to decide what action they will take.

Personnel Today

Personnel Today articles are written by an expert team of award-winning journalists who have been covering HR and L&D for many years. Some of our content is attributed to "Personnel Today" for a number of reasons, including: when numerous authors are associated with writing or editing a piece; or when the author is unknown (particularly for older articles).

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