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Are we nearing the end of final salary pension schemes?

It has been revealed that 80% of company directors in the UK believe that final salary pension schemes will close their doors to new members in the short term. The ongoing recession coupled with the performance of investment markets over the last decade has seen more and more final salary pension schemes slip into deficit which has resulted in a very heavy burden for sponsoring companies.

While it is difficult to pinpoint the moment when the final salary pension scheme sector turned, many people look back to the time when Gordon Brown was Chancellor of the Exchequer and introduced a number of taxes on pension fund income and pension fund assets. In what was the classic "smash and grab" this resulted in a massive windfall for the government but saw pension funds stripped of vital income for the future. It's not just the short-term reduction in funds available for investment but the fact that the reinvestment of income and capital in the future was also impacted.

The move to defined contribution pension schemes is growing stronger as companies in the UK look to reduce their potentially growing burden from company pension schemes.

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