http://www.telegraph.co.uk/finance/pers ... level.html
he number of workers enjoying a final salary pension scheme has fallen to an all-time low as hundreds of companies stop offering staff gold-plated pensions.
By Harry Wallop, Consumer Affairs Correspondent
Last Updated: 4:05PM BST 23 Sep 2008
According to official statistics the number of private-sector workers who are members of a final-salary scheme fell from 3 million to 2.7 million during 2007.
This is the lowest level since the Office of National Statistics started keeping records on pensions in 1995 – when 5.1 million private sector workers enjoyed these type of retirement schemes.
Pension experts said the figures were "depressing" and showed how Britain's once-great pension system had been devastated by Government policy and companies' inability to afford final salary schemes. Workers' dissatisfaction has also means they are contributing historically low amounts, the figures showed.
Laith Khalaf, pensions analyst at independent financial advisors Hargreaves Lansdown, said: "The decline has been quite dramatic. And I really worry how bad the figures will look for this year.
"Workers are likely to be saving even less for their pensions after this week's turmoil in the stock market."
The ONS statistics also show that the number of people in the public sector enjoying final-salary schemes is almost double the number in the private sector. Civil servants, MPs, firemen, policemen and all the other members of public sector pension schemes increased from 5.1 million to 5.2 million last year.
Final-salary pension schemes are considered the "Rolls-Royce" of pensions, because they guarantee workers a retirement income that often equates to two-thirds of their annual salary in their final year in their job.
However, they are very expensive for companies to fund and a string of leading household names have stopped offering them. Marks & Spencer, Scottish Power and Rentokil have all closed their schemes to new members.
The one place were final-salary schemes are still the norm is the public sector.
Ros Altman, the pensions campaigner, said: "The public sector employs one-fifth of the country's workforce, but they enjoy higher than average pay and they have a Rolls-Royce type of pension that are dying out in the private sector.
"They are completely underwritten by the taxpayer. The public sector is immune from the turmoil in the financial markets."
Those not in final salary schemes tend to be in less generous defined-contribution schemes. These allow workers to contribute a set amount each year, which is usually matched by the employer. The 'pension pot' is then swapped for an annuity at retirement, which is a contract that pays out an annual income.
The figures show that employees were contributing just 2.6 per cent of their salary each year in defined contribution schemes, on average. This has fallen from 3 per cent the year before.
Shadow work and Pensions Secretary, Chris Grayling, said: "The steady unravelling of our pension system under Tony Blair and now Gordon Brown just goes on and on. "The pensions divide between the public and private sector seems to get wider and wider as the years go by – and more and more businesses are struggling to keep their pension schemes afloat.
"It's a pretty sad state of affairs, given how much stronger our pension system was a decade ago."
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