Pension schemes feel the impact of the recession Go compare with our comparison table

Pension schemes feel the impact of the recession

30 November 2009 / by Andy Davies

Pension schemes continue to be hit by the effects of the recession, according to new figures from the National Association of Pension Funds (NAPF).

In its annual survey, the NAPF has revealed that the number of private sector defined benefit (DB) pension schemes open to new members has fallen by five per cent in the past year to 23 per cent.

According to the NAPF, further changes are also likely as more schemes have indicated that they will change benefits in the near future to new employees and/or current scheme members.

Despite the recession appearing to hit the availability of DB pension schemes, defined contribution (DC) schemes appear to have weathered the storm with contribution rates remaining stable standing at 11.5 per cent, while 10 per cent of schemes have suggested that they will increase contributions in the future.

The NAPF's annual survey has also revealed some uncertainty regarding the Government's 2012 pension reforms, which will introduce auto-enrolment into workplace pensions.

While 41 per cent of employers have said they will maintain their scheme in its current form and auto-enrol their employees into it, 27 per cent of employers have yet to decide what action they will take.

Commenting, Joanne Segars, NAPF chief executive, said: "Our survey shows the high levels of commitment employers have in providing good quality pensions for their staff; but the recession has made their job more difficult."

The NAPF says it now wants to see "decisive action" by the Government to support workplace pensions, stating that the "most effective way" to do this would be to "issue more long-dated and index-linked gilts".

"The Government can no longer sit on its hands. It must take bold and positive action to help support employer-sponsored pensions. This single measure would benefit pension funds by helping to reduce deficits and support corporate scheme sponsors by reducing the scale of pension fund liabilities on their balance sheets.

"It is an opportunity that must not be missed," Ms Segars added.

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