DB closures 'leading to pensions gap'

14/09/2009

The closures of defined benefit (DB) pension programmes are leading to a gap in pensions for two-thirds of UK workers, unions have warned.

Defined contribution (DC) schemes are unable to plug this gap, which is threatening the future of employees, the Trades Union Congress (TUC) said.

Analysis by the organisation found that there was a 5.1 per cent drop in DB pensions' membership in the private sector between 2005 and 2008.

However, the increase in proportion of members to DC schemes in this period was just 1.9 per cent.

Brendan Barber, general secretary of the TUC, said: "Many seem to think that the hole left by the closure of private sector salary related pension schemes is being plugged to some extent by new money-purchase DC schemes, albeit of lower quality.

"But these figures show that this is not true. The growth of DC coverage is much slower than the sharp fall in DB provision. The most recent figures even show that more people are building up a DB pension than are doing so in a DC scheme with a modest employer contribution."

Tags; Retirement Money Problems,

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