Pension Schemes Closing Down

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Yesterday’s announcement by the National Association of Pension Funds (NAPF) of the diminishing availability of pension schemes has not come as a great surprise and due to the current state of the economy and the growing strain on businesses it is likely that this trend will continue.  Businesses are still feeling the strain of the economic climate and cannot afford to take on additional liabilities under these schemes with the government’s current policy of quantitative easing.

Of the 1,018 schemes run by 280 firms, the NAPF found that only 13% of final-salary pension schemes were found to be open to new joiners, a fall from 19% in 2011.  Meanwhile, 31% were also unavailable to existing staff, a rise from 23% in the previous year.

The NAPF criticised the government’s quantitative easing policy, which has pushed many final-salary schemes into large deficits.  Under the policy the Bank of England has picked up 33% of all government bonds to try and prevent further recession.  There has been a knock-on effect on pension schemes with employers foreseeing the need for an increased stock of assets to pay the pensioners of the future.

The process of auto-enrolment, which is currently being phased in will balance the effects of the diminishing availability of company pension schemes but it is not clear whether this will be enough to safeguard employees’ retirement.

For advice on the likely effects that the current changes in pension laws would have on your business contact our Employment law team or call 01254 222399.

This entry was posted in Employment Law.

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