Rate of final salary pension scheme closures slows

The closure of final salary pension schemes has slowed, according to the National Association of Pensions Funds’ (NAPF) Annual Survey.

In 2007, around a third of private sector defined benefit schemes remained open to new members (31% in 2007, 33% in 2006). In addition, 95% of schemes still allow members to accrue new benefits. Around two thirds (62%) expect to keep these schemes open in either their current or a modified form over the next five years, with just 1% of open private sector defined benefit schemes expecting to close the scheme to current employees.

The survey also showed that 75% of schemes believe they will be affected by the 2012 pension reforms which will include the introduction of personal accounts.

However, findings also revealed that employers operating defined contribution schemes are, on average, contributing 7% of pensionable pay – more than double the 3% required by personal accounts system.

In terms of trustees, 20% of schemes state that employer-nominated trustees had resigned owing to concerns over conflicts of interest or trustees’ increasing workloads. The survey also showed that 40% of schemes use independent (professional) trustees and others are considering doing so.

Joanne Segars, NAPF chief executive, said: “The survey’s findings show the importance employers place on continuing to provide good workplace pensions. This commitment should be celebrated. 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.”