The end of final salary pensions is upon us, says expert

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The end of final salary pensions is upon us, says expert

Final salary pensions have been over "for quite some time" according to an independent pensions expert.

Dr Ros Altmann, formerly an academic in England and the US before working in the City, said that it was presumed that final salary pensions would be funded through equity returns.

She claims that in the 80s and 90s, equity returns were "exceptional", but she says that the idea that these returns could reliably keep up with inflation was "unrealistic".

"The writing has been on the wall for quite some time for salary pensions, and as soon as they started closing to new members, that was it really," she said.

As a final salary scheme requires a company to be able to pay money into it for up to 50 or 60 years and not just today, she believes no employer can really afford to sign up to this type of scheme anymore.

Recent research from the actuarial company Watson and Wyatt has shown that the 16 per cent of schemes open to new entrants at the moment is expected to fall to two per cent within three years.

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