The predicament of generous final salary pensions may be worse than previously estimated, according to new research that suggests fewer than four out of 10 final salary schemes remain open to new members.
Research published by the Association of Consulting Actuaries shows 37% of DB schemes in the UK remain open to new entrants. One in 10 schemes has started winding up, 14% are closed to future accrual while 39% are closed to new entrants. Of those schemes remaining open, almost half are contemplating closure.
ACA’s survey was based on reports from its members which advise around 3,000 final salary schemes, representing a combined 6.8m members.
ACA says the closure of DB schemes would matter little if they were being replaced by DC arrangements attracting similar contributions. But its members report that money purchase contributions are falling short of DB contributions. Earlier this year the consultant Towers Perrin said contributions into DC schemes were, typically, running at half the level of those into DB pensions.
“We are extremely worried that the impact of the changes that are taking place in terms of future pensioner incomes is being under-estimated by the government and, as a result, there has been an inadequate policy response,” says ACA chairman Gordon Pollock.
ACA’s research comes as union leaders are suggesting the government should force companies to pay at least twice as much as their employees into occupational pension schemes.
A new report by the Trades Union Congress, the body representing over 7m workers, suggests the UK’s pensions problem will not be sorted out unless employers make compulsory contributions to occupational pensions and workers join company schemes.
The report accuses employers of giving in to a herd mentality in shutting down final salary pension schemes. TUC general secretary John Monks said: “individuals can never save enough to fund a secure retirement. We need a partnership between employers, the state and workers, backed up by legislation to ensure that millions do not spend their hard-earned retirement in poverty.”
Responding to the TUC, the Confederation of British Industry welcomed plans for a national pensions debate but dismissed compulsory employer contributions as akin to a “tax on business”.
Deputy director general John Cridland said: “employers do not want to offer lower pensions to their staff but they must protect the long term security of both their businesses and the pension scheme. It is naïve to believe that stock markets can fall with no impact on pensions provision.”

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