There is no doubt that the last few years have been a disaster for the UK pension industry with the value of personal pensions under pressure, final salary pension schemes reporting massive deficits and many of those taking retirement receiving significantly lower incomes than they had expected only a few years ago. All in all there needs to be a major change in the structure and make-up of the UK pension industry and while the government has attempted to introduce new regulations, in many ways these have backfired.

Many believe that the government has become overcautious on the way in which pension fund deficits are calculated resulting in some massive "current deficits" which do not take into account future income and potential investment returns. However, under the current regulations there is a need for companies to inject capital in the short term to make up any deficit, something which could potentially impact upon the trading position and financial strength of pension scheme sponsors. We have seen a number of pension schemes transferred to money purchase pension arrangements which effectively offer no guarantee of future income and rely purely and simply on annuity rates at the time of retirement.

It is highly likely that we will see the end of the final salary pension scheme in the private sector although the public sector is a very different matter where taxpayers are expected to cover growing deficits.

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