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Pension data foreshadows government report

The National Association of Pension Funds published its authoritative annual survey yesterday ahead of the governments pension proposals due next week. The gloomy NAPF findings include:

• 84 guaranteed or 'final-salary' schemes were closed in 2002, almost double the rate in 2001.
• Employer contributions into replacement money purchase schemes are running at less than half the level of final-salary schemes.
• A typical employee in a money purchase scheme is £100 a month worse off than their counterpart in a final-salary scheme.
• 30% of private employer schemes are now closed to new entrants, compared with 17% in 2001 and 12% in 2000.
• The majority of respondents expect the State pension age to be lifted to 70 by 2030.

CBI chief Digby Jones commenting on the NAPF report said, "The world of pensions has changed.”

"I was more struck by the number of firms clinging to final salary schemes than by the number that can no longer offer them," he said.

"Many businesses are acting to head off the increasing financial risks but the vast majority are toughing it out. At a time of skill shortages, many are looking for ways of reducing exposure within a final salary environment to maintain an edge in the employment market.”

"Any reasonable assessment of the facts shows the pension predicament is about the changing environment, not companies shirking responsibilities. That is why next week's green paper is such an important opportunity to reshape the system.”

Christine Farnish, chief executive of the NAPF said:

"We hope the government will produce proposals in the Green Paper which will lead to a simpler pensions landscape and which can boost both confidence and security in the pension system."