Private sector final salary pensions are closing their doors to new staff at the fastest rate on record, the National Association of Pension Funds (NAPF) said today.
Final salary pensions open to new joiners dropped a third in 2012 to 13% down from 19% in 2011. This was the steepest fall since comparable data began in 2005, when 43% were open.
The latest NAPF Annual Survey also revealed that these DB pension funds are increasingly closing to the workers who are already in them. The number that shut their doors to existing staff climbed to 31% in 2012, a hike of over a third from 23% in 2011.
Reasons for shutting these schemes include an ageing population and poor investment returns, but the NAPF report that it’s also the higher liabilities and low yields created by quantitative easing that has prompted fresh scheme closures.
The few remaining private sector pensions which are still open to all staff will see big changes in the next five years. Almost half will be closed to new staff. Find out about other trends in insurance and pensions.