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Will final salary pension schemes disappear forever?

Over the last few days we have seen confirmation of multi-billion pound deficits in a variety of UK pension schemes which many believe will sound the death knell for final salary pension schemes. These are schemes which are based upon the length of service of the underlying scheme member and their salary at retirement. There is no reference to investment returns over the period and as such a number of pension schemes in the UK are in serious financial trouble. So will final salary pension schemes disappear forever?

The sad truth is that unless the UK government is able to instigate a number of tax changes which would benefit final salary pension scheme, they will in due course disappear. This will impact upon the retirement income for many people in the UK and ultimately a reduced income will eventually place more pressure upon the UK benefits system. While there are a number of reasons why pension schemes are struggling at the moment, there is no doubt that tax changes introduced by the last Labour government played more than their fair share in creating the situation we are faced with today.

Ultimately, if pensioners are unable to fund a reasonable standard of living in their later years it will place pressure upon UK government funding. In simple terms, this is a lose lose situation!

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