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Latest News
28 Jan 2013

Only 13% Of Final Salary Schemes Open To New Members

Only 13% of final salary pension schemes at UK companies remained open to new members in 2012, which is down nearly a third from the percentage a year earlier, according to new data from the National Association of Pension Funds (NAPF).

In 2011, 19% of final salary schemes were open to new members. By contrast, in 2005, some 43% of final salary pension schemes in the UK were still accepting new members.

The study of 199 schemes in the private sector, which hold £531 billion in assets, shows that the proportion of final salary schemes closed to new members is reaching a record high.

The NAPF attributed the sharp rise in the number of schemes closed to new staff to the longer life expectancy amongst Britons, red tape and weak investment returns. However, it added that many schemes had closed to new members because of the increase in pension liabilities due to the low yields on gilts and government bonds.

The survey also showed that almost a third of final salary schemes barred existing members in 2012, up from 23% the previous year.

The NAPF´s chief executive Joanne Segars said many companies found the pressures on final salary schemes too great to handle.

In addition, the NAPF study found that just 9.9% of the total assets of UK pension funds were invested in UK equities last year, which is down from 12.2% in 2011. This means that less than £0.10 in every £1 of pension fund assets is now allocated to UK equities.

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