The warning, which comes from the Pension Corporation comes as the pension deficit continues to rise, with the research suggesting that as much as thirteen percent of a companies’ total £750 billion of cash balances will be required to prevent deficits rising further – which will take money away from vital investment such as jobs and growth.
The additional money is required to ease the deficits, despite businesses already contributing £80 billion of deficit reduction payments over the last three years.
Along with warning businesses that extra finances are required to stop soaring pension deficits, British businesses have also been advised that more final salary pension schemes could be forced to close, with the research saying: “UK plc has been swimming hard upstream, with lots of effort being expended, but not making any real progress against the powerful deficit current.
“Trustees with open schemes remain fearful that even these will be closed to future accrual because of the ever increasing burden placed on companies.”
Four years ago, forty-three percent of final salary schemes were open to new members, and only twelve percent were closed to future accrual. However, today only sixteen percent of final salary pension schemes in the private sector remain open to new members, whilst twenty-four percent have been closed to future accrual for existing members.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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