Now Allders scraps final salary

12 April 2012

STORE group Allders is the latest company to close its final salary pension scheme to new employees. Its annual report reveals that from April, new employees will have to join a stakeholder scheme instead - even though Allders' pension scheme is showing a £3.4m surplus.

Research by Financial Mail shows that nearly half of the UK's biggest companies have either closed final salary schemes or never had them in the first place. The growing exodus from final salary plans is because of their soaring costs to employers.

They must make up any shortfall in funds' ability to pay guaranteed pension benefits. But the fall in share prices over the past two years has hit the value and income of pension funds, and their outgoings are rising as pensioners live longer in retirement, so companies face big bills unless they close schemes to new staff.

Just 567,000 people have taken out stakeholder pensions since they were launched last April, according to figures to be published this week by the Association of British Insurers. This is a fraction of the Government's target of 5m.

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