According to a recent survey conducted by the National Association of Pension Funds, only 23% of final-salary pension schemes are still open to new employees in the private sector as companies are forced to employ cost cuts in every possible way under the increasing financial crunch.
About a year ago, the same figure was recorded as 28%, but since then, even more schemes have been pulled back making the number fall even further. The pension schemes' pull back has affected both new employees and existing ones.
As per the NAPF survey, despite the recession and severe cost cuts, employers had not cut down on their contribution to the Defined Contribution scheme, and joint staff and employer contribution rates still stood firm at 11.5% of the total salaries.
Over the coming 5 years, the survey has warned that about 31% of private sector firm, which currently offer heavy and very attractive pension scheme plans, are expected to close these benefits completely. Over the next year, the number of closures is expected to be around 12%.
"Every week, another big company says it is going to close down its pension. I think there will be just a handful of defined benefit schemes in the private sector left in ten years' time", said Laith Khalaf, a Pensions Analyst at Hargreaves Lansdown, financial advisers.
The NAPF has warned employees that a substantial change is to be expected over the coming times on the pension schemes front, and they should brace themselves accordingly.