'Children unlikely to receive final salary pensions'

20 November 2007
Employers have increasingly switched from final salary schemes to money purchase schemes in recent years, according to one expert.

Steve Bee, head of pensions strategy at Scottish Life, said that although this is unlikely to concern people who have benefited from their employers' level of pensions investment, the younger generation are not expected to be offered final salary schemes.

"They are going to take on the higher risk of money purchase schemes and, crucially, they are not going to get large amounts of money paid into their schemes by employers, as we did with our final salary schemes," he commented.

Overall, employers have reduced their contributions to pensions from a previous level of between 15 per cent and 20 per cent, to five per cent to eight per cent at present, Mr Bee stated.

With a number of employers choosing to no longer fund pensions, people ought to be aware of the implications this could have for future retirement, he added.

In related news, Baring Asset Management recently reported that seven per cent of UK adults are set to rely on their property investments to provide an income when they retire.

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