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Pensions - Closing down


More employers are closing their final-salary-related pension schemes to new employees or switching them off to existing workers, according to a report by PricewaterhouseCoopers.

It revealed that employers are closing their salary-related pension schemes to new employees at a faster pace than last year, while more than a quarter of employers surveyed have followed Rentokil's recent example and switched off their final-salary schemes to existing employees or are considering the move in the next 12 months.

The survey of 86 companies also found that 35 per cent are considering a buyout of some or all of their pension liabilities, up from 27 per cent in 2007. Larger companies were more likely to view buyouts as an option, where companies offload their final-salary pensions to private insurance firms. No worries there, then.

Employers are using the excuse of credit tightening and economic slowdown to justify this naked worsening of workers' standard of living. Between 4 and 5 million private-sector workers expect to retire with a pension related to their final salary.

There have been union fights to preserve these retirement plans, notably in May when workers at Grangemouth oil refinery forced their employer to back down after they went on strike to keep its final salary pension scheme open to new accruals and new entrants.

But the pattern of contemporary capitalism with regard to pensions is clear: employers will aim to worsen or scrap their pension schemes, leaving workers with no choice but to organise collectively to defend them – or to see themselves plunged into poverty and degradation in old age.