NAPF Deals Further Blow For Pension Plans
by Stewart Douglas
Story link: NAPF Deals Further Blow For Pension Plans
The National Association of Pension Funds has today dealt a further blow to the future of private pension schemes with the forecast that the next five years will see more widespread closures of final salary company pension schemes, as a result of longer lifespans post-retirement and an ageing population.
According to the findings of its annual survey in 2007, the National Associate of Pension Funds found that just 31% of the 369 private pension funds it studied were accepting new members, with around 15% of those suggesting they were likely to close their doors to new members over the next five years.
It was also turned up that some 6% of those schemes will also close their doors to current staff, reflecting the extent of the problems within the private pensions sector, which has been plagued by poor stock market performance and wider social changes, which have caused a great deal of problems in terms of funding many final salary pension schemes.
With the population ageing and birth rates falling, pension funds are reckoning with the problems of maintaining contributions to the fund, as with replacing the value of depreciated investments within the funds themselves, which is now uncovering strong deficits.
Similarly, with lifespans increasing beyond retirement, pensions funds are requiring to contribute more heavily for longer to employees, which has a similar effect on depleting resources at pension funds.
“Around two thirds expect to keep these schemes open in either their current or a modified form over the next five years. However, while the overall picture shows that the pensions landscape is stable, the operating environment for occupational pensions is tough and likely to get tougher”, said Joanne Segars of NAPF.
It remains to be seen whether this will give rise to the problems forecast, which could revolutionise the way we think of pensions and providing for our retirement.
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