Half of UK’s Final Salary Schemes to Close
Monday, August 17, 2009 8:49
In recent years, there has been an increasing trend for companies to close their final salary pension schemes to new members and replace them with less generous defined contribution schemes, which are also known as defined benefit schemes.
A new research just indicated that half of all the final salary schemes of the UK companies will be closed within three years. As a result, the companies are embroiled in an escalating pension crisis. About 75% companies with defined benefit schemes, including final salary pensions, have already shut them to new staff. According to the report by the consultancy firm—Watson Wyatt, it is shown that though only 9% of companies have shut schemes that cater for existing members, this figure will rise to 50% by 2012. Watson Wyatt estimates that around 28% of companies will keep their defined benefit schemes open to the existing employees, but on reduced terms.
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