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Is Pension Regulation Red Tape Killing Final Salary Schemes?

News that the government is going to be adding a new layer of regulations and rules with regards to final salary pension schemes has provoked a furious response for the CBI who's membership are growing tired of continuous meddling in the sector. The new raft of regulations will tighten the funding which needs to be in place and place a straight jacket around the funds in question, very much restricting what pension trustees can and can't do.

While we have seen a major shift from final salary schemes to money purchase schemes over the last few years, there is speculation that up to 3 million employees currently in final salary schemes could see their funds sold out or transferred to money purchase arrangements. The cost and pressure involved with administering these schemes is not proving cost affective for many firms and some are ready to throw in the towel.

The problem is that the more pressure the authorities put on the sector the more chance of change and ultimately it will be the employees who will lose out. A longer term approach to funding issues is being suggested but the government seem intent on tightening the straight jacket which was applied a few years ago, squeezing the life out of many arrangements.

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