As reported by the National Association of Pension Funds today: the closure of private sector pension schemes accelerated in 2012. Its annual survey found that only 13% of final-salary schemes were open to new joiners, down from 19% in 2011. Meanwhile 31% were now closed to existing staff as well, up from 23% the previous year.
Please see comment below from Alan Collins, Head of Corporate Advisory Services at Spence & Partners in reaction to this announcement.
“The NAPF correctly identifies a number of factors which have contributed to the closure of schemes, such as the impact of quantitative easing in pushing up the current value of pension scheme liabilities.
“The clear message is that private sector employers are no longer prepared to stand behind the risks of operating defined benefit schemes. The future costs remain unknown and too many employers have been damaged by past promises turning out to be far more expensive than anticipated. This has left employers focussing their attention on plugging historical deficits, leaving limited available funds to provide pension benefits for current employees. Employers are rightly not prepared to see their future viability put at risk by continuing these schemes. Indeed many are looking at ways in which the risks associated with past accrual can be better managed.
“It is worth remembering that private sector employers do not have the luxury of moving the goalposts on past promises in the same way that the government has done by increasing the state pension age and reducing future pension increases.”
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