- Final salary pensions stampede?
So everybody knows that more and more Final Salary pension schemes are closing their doors to new employees. In fact only a quarter of the UK’s 8,500 final salary pensions are open to new employees.
The NAPF (National Association of Pension Funds) predicts that 1,000 of these face closure to new entrants over the nexy five years.
The NAPF survey, out today, points to 25% of firms considering closing their final salary schemes to existing members, which means that no new contributions would be accepted.
This is big news, and it’s a massive increase from the same survey just 6-months earlier.
Conventional wisdom has always dictated that if you have a final salary pension you shouldn’t consider moving it. Final Salary Pension schemes now have a collective defecit of £200bn – that’s 43% higher than it was in November, and has been brought about by the credit crunch, economic slowdown and subsequent stock market decline.
If you’re “lucky” enough to be in a final salary pension scheme, you need to think about your options if you were barred from making further contributions. You wouldn’t expect a reputable adviser to advocate anything as drastic as moving money out of a final salary pension without some serious thought, but the transfer value of your pension could be dramatically reduced if your scheme closed or your employer went into liquidation with a hole in the pension fund.
