Few final salary pensions open
Updated on 25 August 2008
The number of final salary pension schemes that are still open to new members has fallen to a new record low, figures showed.
Just 17% of the generous pension schemes can still be joined by new staff, down from 28% a year ago, according to Aon Consulting.
The figure is also a sharp drop from 2003, when half of all final salary schemes were still open to new members.
The group blamed the closures on a combination of factors, including tighter regulation, volatile investment markets, increased life expectancy and fears about future changes to accounting standards for pensions.
But it said that while the vast majority of final salary pensions are now closed to new members, 81% remained open to existing ones.
Under final salary pensions employers state how much a pension will be worth based on the number of years a worker has belonged to the scheme and their pay immediately before retirement.
The majority of final salary schemes that have been closed have been replaced by less generous defined contribution ones, under which employers only guarantee how much they will pay into the scheme and not what it will be worth on retirement, leaving individuals to shoulder the investment risk.
June Grant, principal at Aon Consulting, said: "With the number of final salary schemes plunging to a record low, they have now become gold dust for the employees who still have them.
"Employers can turn this to their advantage because the schemes give them a competitive edge in the fight to attract and retain talent."
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