Who offers final salary pensions?

As of this writing, if you ask who offers Final Salary Pensions you would be hard-pressed to find any private organisations offering any kind of defined benefit pension to newcomers. Even the public sector which has held on the longest has moved over to defined contributions arrangements.

According to new figures from the Pension Protection Fund (PPF) and The Pensions Regulator, only 1,013 of the UK’s 6,400 Final Salary Pension Schemes remain fully open to employees. This is about 200 schemes fewer than in 2019.

Recent companies to announce the closure of their final salary schemes include Shell, Unilever, and Alliance Boots. The figures are contained in the PPF’s so-called Purple Book, an annual snapshot of the UK’s Final Salary Pension Schemes.

The reduction means that in the last 12 months alone around 400,000 fewer employees have access to generous retirement plans. Under defined benefit schemes, a person’s income in retirement is based on their final or average salary. The pensions are largely paid for by the company.

Joanne Segars, chief executive of the National Association of Pension Funds (NAPF), which represents pension schemes with 15 million members and assets of £800 billion, said that the new figures show the “relentless” closure of final salary schemes.

Ms Segars added that new regulations from Europe which will make it even more expensive to run Final Salary Pension Schemes could force more businesses to close their schemes.

The vast majority of the Final Salary Pension Schemes run by companies have either been closed to new members, closed to existing members or are in the process of being wound up.

Companies are closing the schemes which are also known as defined benefit schemes because of the massive liabilities they need to manage for decades to come.

Companies are increasingly switching the retirement schemes they offer to cheaper so-called defined contribution schemes, in which pay-outs are based on contributions from both employer and employee.

Although defined contribution schemes are cheaper to run for companies, they can also be less generous in what they payout, meaning that members are likely to have a poorer retirement unless they become actively involved with their retirement planning.

According to the PPF, 3.73 million employees are currently members of fully open Final Salary Pension Schemes, down from 4.1 million a year ago.

She said that an ageing population, too much red tape, and tough economic and investment environments are all responsible for this trend.

Joanne Segars, chief executive of the National Association of Pension Funds (NAPF) says: “Whatever the type of pension, the main thing is to get more people in the private sector saving. The UK simply isn’t salting enough away for its old age.”

This article looked at who offers Final Salary Pensions but there is a great deal more to consider than is covered in this article. Individual Financial advice should only be given to a person after a thorough assessment of all personal (and their partner’s) financial circumstances so that suitable and appropriate advice can be given.

Would you like to get some professional advice to gain increased financial peace of mind and family security? If the answer is yes, the next step is to have an informal exploratory chat with a qualified financial adviser to see if it is worthwhile proceeding to the formal process known as regulated financial advice.

Regulated advice can only be given by an appropriately qualified person who is regulated by the Financial Conduct Authority (FCA). Pension advice should only be given by pension specialists working with financial advice firms holding the relevant pension advice permissions.

To help you make the right decision for your final salary pension, we will take you through a clear, simple, transparent, and regulated four step process. 
If you would like to explore and discuss the options for your final salary pension transfer,
agilepensions.uk - helping you make the right decision on your pension 
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