Pensions

Three million members of final salary pension schemes face uncertain future

Up to three million members of final salary pension schemes face an uncertain future in retirement.

There are 6,000 private sector final salary schemes, also known as Defined Benefit Pension Schemes, across the UK with 11 million members.

A report by the Defined Benefits Taskforce found three million members in the most vulnerable pension schemes have only a 50/50 chance of receiving full benefits when they retire because of the deficit in the schemes.

Pension deficit

Joe Dabrowski, from the Pensions and Lifetime Savings Association who led the support work for the Taskforce, said around 60 per cent of the schemes identified as vulnerable were in sectors such as manufacturing, retail and financial services.

The remaining 40 per cent came from areas such as general services, transportation, construction and farming.

And although there is no one age group identified in the report at greatest risk, Mr Dabrowski said: “It will mostly be people in the middle, from the age of 30 onwards, who tend to be in these schemes.

“People who joined the workforce 15 to 20 years ago.”

An average Defined Benefit Pension Scheme has around 1800 members and assets of around £200 million.

Joe Dabrowski said: “It will mostly be people in the middle, from the age of 30 onwards, who tend to be in these schemes.”

But those schemes assessed as weak vary greatly in size, according to Mr Dabrowski, with some big high profile schemes as vulnerable as the much smaller ones.

Trustees of all those pension schemes found to be weak in the report will now have to work with The Pensions Regulator to agree a recovery plan.

Leave a Reply

Your email address will not be published.

eleven − nine =