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Last Updated: Friday, 4 January 2008, 00:04 GMT
More closures for pension schemes
Heathrow Airport
BAA staff recently threatened to strike over their pension scheme
More final-salary pension schemes are likely to close to new members in the next five years, says the National Association of Pension Funds (NAPF).

Its survey for 2007, covering 369 private sector pension schemes, found 31% of final-salary schemes were still open to new members.

However, the survey found that 15% of open schemes expect to close to new joiners in the next five years.

And a further 6% of all schemes will close even to existing staff.

This would bring the proportion of schemes covered in the survey that are closed to all employees to 11%.

Closures

There was a flurry of final-salary scheme closures in the early years of this decade which was provoked by a three-year slump in share prices which undermined scheme finances.

The operating environment for occupational pensions is tough and likely to get tougher
Joanne Segars, NAPF

But that process has slowed down in the past few years.

The NAPF said this reflected a more stable environment for pension schemes and the private sector employers that run them.

"Around two thirds [of employers] expect to keep these schemes open in either their current or a modified form over the next five years," said NAPF chief executive, Joanne Segars.

"However, while the overall picture shows that the pensions landscape is stable, the operating environment for occupational pensions is tough and likely to get tougher."

More change

The NAPF warned that the next swathe of changes for schemes will come in 2012 when the government sets up its new state pension plan, known as personal accounts.

The NAPF's survey suggests that 75% of schemes think they will have to make changes to the way they operate, for instance by automatically enrolling staff into membership.

This week the Association of Consulting Actuaries (ACA) said the new state scheme may provoke a process of levelling down among some smaller employers.

It said they might be tempted to stop providing a pension scheme for their staff altogether, preferring instead to direct their own and their staff's contributions into the new state pension plan instead.

The closure of final-salary pension schemes continues to be a controversial subject, as shown by the recent strike threat by staff at BAA where trade union members have been upset about the closure of their scheme to new joiners.

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