It looks like there may be more of us than ever! Three million savers in final-salary pension schemes only have a 50/50 chance of receiving the payouts they were promised, a study has concluded.
Some employers were under pressure to meet their pension obligations, the Pensions and Lifetime Savings Association (PLSA) said.
High-profile cases such as the BHS collapse have highlighted concerns over the future of workplace pensions.
The PLSA said one solution could be the pooling of resources into “Superfunds”. This would allow relatively small companies to pay a fee to transfer final-salary pensions to a more substantial fund – which would then have more significant investment opportunities.
A standard deal for pension scheme members could see some receive better final payouts as a result, but others could see their expected income deteriorate.
But pensions consultant John Ralfe described the Superfund plan as “short on practical detail”.
“The PSLA does not explain how pension obligations would be consolidated. Either each company is still on the hook for its own individual pension liabilities in the new ‘Superfund’ – which does not help anyone – or companies have cross-guarantee all other companies schemes, which no one will do,” he said.
The in-depth study by the PLSA considered the outlook for final-salary pensions used by 11 million people in the UK.
Employers have pumped in an extra £120bn in special payments to try to plug financial holes in these schemes, but the combined deficit of the UK’s 6,000 schemes remains at £400bn.
The majority of final-salary schemes had a sustainable model for meeting future payouts, the PLSA said. However, three million members of schemes faced a more uncertain financial future, it concluded.
Our Work Section is pretty comprehensive. Starting to draw a pension doesn’t mean the end of your career. But it does mean you have choices. What you do, how much, who for, how long and when – they now all belong to you. Take a look at the Government Regulations for drawing your pension.