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Thursday 17th July 2008
Pension experts at Watson Wyatt have stepped into the argument about final salary schemes and whether they are at all feasible. Using their experience in the market place and feedback from an array of customers they are forecasting wide ranging changes to the final salary scheme sector, with closures and conversion set to increase.
It is already known that about 6% of all final salary schemes have been closed to new members, with the figure expected to rise to 15% by 2010 and 40% over the next decade. This will have serious repercussions for those looking to retire in the future and see pensions slashed when compared to final salary schemes of today.
The problem seems to be the lower investment returns which have crept in over the last few years and suggestions that recent changes to pension fund regulations will see companies taking a more defensive approach. People are also living longer than expected these days which is putting more and more pressure on already stretched schemes.
The pension industry in the UK has undergone a massive change over the last ten years but unfortunately it looks as though this is very much the tip of the iceberg. In order for future employees to live a comfortable retirement, investment levels will need to be increased substantially although not all people are in a position to do this. |
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