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Final salary pensions under threat

27 September 2004
The forthcoming Pensions Bill could mark the end of private sector final salary pensions schemes.

Pensions lawyer Clive Weber claims that, in its present form, the Bill could accelerate the steep decline in company pension schemes, as directors increasingly face being held personally liable for holes in pension funds.

The head of pensions at Wedlake Bell is calling on businesses to register any objections to the Bill with pensions minister Malcolm Wicks before Thursday's informal deadline, according to The Times.

The newspaper reports that, under the provisions of the Bill, well-funded final salary schemes must pay into a proposed Pension Protection Fund to provide guarantees for failing schemes.

The new legislation is expected to raise the cost of pensions provision for sound employers and stretch the finances of smaller firms.

An equivalent fund in the US is £6.2 billion in deficit and the cost of operating the UK fund could increase considerably if a large-scale final salary scheme folds.

The proportion of companies offering final salary pensions schemes has already fallen from 56 per cent to 38 per cent in two years.
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