'Drawbridge rising' as gold-plated pension pots are phased out of private sector
By
Becky Barrow
Last updated at 8:48 AM on 15th December 2011
Joanne Segars of the NAPF said staff were being 'frozen out' of the best pensions as 'the drawbridge rises'
Gold-plated pensions in the private sector will have almost disappeared within a decade, experts warned yesterday.
Bosses are shutting schemes in record numbers, according to a survey published by the National Association of Pension Funds.
In 2008, only 3 per cent of ‘defined benefit’ pensions, such as final-salary schemes, had closed to new members.
Just three years later, the proportion has rocketed to 23 per cent – and will keep rising until gold-plated pensions in the private sector are close to extinction.
NAPF estimates that in the past three years, up to 250,000 workers have been kicked out of final-salary pension schemes and shifted to cheaper alternatives.
Laith Khalaf, of financial advisers Hargreaves Lansdown, said: ‘Every week, another big company says it is going to close down its pension.
There will be just a handful of defined-benefit schemes in the private sector left in ten years’ time.’
Joanne Segars, of NAPF, said staff were being ‘frozen out’ of some of the best pensions as ‘the drawbridge rises’.
NAPF’s annual survey, published yesterday, shows bosses are closing defined-benefit schemes to cut the amount they pay in, and switching workers to less lucrative ‘defined-contribution’ schemes.
Fewer and fewer private companies are offering employees gold-plated pensions
For example, the average payout from a defined-benefit pension is £7,290 a year. For a defined-contribution scheme, it is only £1,400.
Of pensions still open to existing staff, 30 per cent ‘expect to close’ in the next five years and 11 per cent will make other changes.
Public-sector staff are rapidly becoming the only workers who can look forward to a good retirement payout. A typical state worker gets a pension of £7,840 a year, while two thirds of private-sector staff do not have a single penny in a company scheme.
- Old people thinking about downsizing should take advantage of record rents and consider letting their homes to make up for poor pensions, says the Association of Residential Lettings Agents.
Everyone is taking a hit - except the fat cats and politicians ofcourse.
- Craig , Liverpool, 16/12/2011 22:29
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