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Another day another final salary pension scheme closes

It has been revealed that Whitbread is the latest UK company to close its final salary pension scheme to existing members. The move, which has been under consideration for over four months, will affect around 3% of Whitbread's workforce and see their pension fund assets transferred to "defined benefit schemes". In effect this will take away the guarantee of a fixed pension upon retirement and leave them open to the forces of the annuity market.

While this is obviously a disappointment for those Whitbread employs who are members of the final salary pension scheme it is a situation which is becoming more commonplace across the UK. Despite various noises from the UK government, nothing has been done and no tax incentives have been introduced to try and save these particular pension arrangements, and indeed the UK government is currently considering changes to public sector final salary pension schemes.

It will be interesting to see developments in the defined benefit pension scheme market because rates over the last few years have been very disappointing and led to significant reductions in pension payments. More and more people in the UK are now growing concerned about how they will be able to fund their everyday cost of living in their later years.

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