Final salary pension schemes continue to decline

A study conducted by the Pension Protection Fund and the Pensions Regulator suggests that the number of final salary pension schemes that remain fully open to new customers has dropped to 1,013 down by 200 on last years figures.

Of the 6,432 final salary schemes surveyed, representing 98% of all UK final salary schemes, the number still open to new employees has fallen from 18% to 16% across the last year. 24% of final salary schemes have stopped further accrual of pension funds for existing members, up by 3% on last years figures.

Final salary schemes are also known as defined benefit schemes. Many companies are choosing to close their final salary plans in a bid to save money as such generous retirement saving options can prove expensive.

If you are a part of a final salary pension you retirement pot is based on you final salary or you average salary, and is largely paid for by your employer.

The majority of final salary pension schemes are closed to new members, existing members, or are in the process of winding up.

According to the report 3.73million employees are currently members of fully open final salary schemes down from 4.1million last year, a drop of almost 400,000.

The collective final salary scheme deficit came in at £225billion at the end of 2011 compared to a surplus of £22billion at the end of 2010.

The figures form a part of an annual "Purple Book" review conducted by the PPF and the Pensions Regulator.