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Employer pension costs double in 10 years

It has been revealed that employer pension fund contributions have ballooned over the last 10 years rising from £21.8 billion in 2001 to £46.1 billion last year. This is one of the unforeseen trends in the UK economy which is now starting to impact upon company balance sheets and even company trading. Companies such as BT have already announced a multi-million pound deficit in their pension scheme and many other companies will suffer the same fate in the months and years ahead.

While there are a number of reasons as to why pensions fund costs have increased, such as increased life expectancy, falling interest rates and a less than buoyant stock market, there is also the fact that Gordon Brown introduced numerous taxes on pension fund assets and pension fund income some years ago. All of these particular factors have now come together with a "big bang" which has effectively blown the UK final salary pension scheme sector apart. There is no way that the final salary system can continue as it is forever and a day and major changes will be made with many companies now looking to close their schemes to new entrants and convert to money purchase pension schemes.

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