Government "burying its head in the sand" over final-salary pensions

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Government "burying its head in the sand" over final-salary pensions

Thu 20th Aug 2009

Dr Ros Altmann, a pensions expert, notes that a problem for companies is that even after they have closed such a pension scheme down, they must still fund the deficit for years afterwards.

She suggests that the government could issue mortality or longevity gilts in order for schemes to be able to start hedging their mortality risk.

"The government is simply burying its head in the sand and somehow going along for the ride instead of leading the way to help employers manage these huge commitments," says Dr Altmann.

Research by Watson Wyatt released last week showed that three quarters of the companies who responded to their survey had closed their pension schemes to new entrants but not to existing members.

The survey also showed that 48 per cent expected that they would close their schemes to existing members within the next three years.

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