Recession offers companies 'way out' of pensions deficit

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Recession offers companies 'way out' of pensions deficit

Companies could ask employees to choose between their job and their pension as a way to reduce deficits in the present financial climate, according to a pensions expert.

Des Hamilton, technical director of the Pension Advisory Service, claims that most final-salary schemes are in deficit and businesses will want to try and get their employees to opt out of them if they can.

He went on to say that it is currently a good opportunity to do this, as they could ask workers if they would be willing to drop the scheme in order to save their job.

"In the present climate employees will no doubt choose their job over their pension," he said.

Mr Hamilton also predicted that final-salary schemes would "continue their demise" for another ten years before dying out.

The results of a KPMG survey were released last week showing that FTSE 100 companies are now going to be spending more on pension payments for past employees than on current workers.

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