Personal Finance

Staff do not have enough to retire

A generation of workers may not have enough money for retirement because UK blue-chip companies are not reducing the huge deficits they have created in their staff pension schemes, according to a report by actuaries LCP.

A total of £17.5 billion was put into pension pots in 2009, which helped cut FTSE 100 firms' combined deficit by nearly half to £51 billion.

But the Accounting for Pensions report claims the increase in contributions from bosses could block any recession recovery as well as put off investors. LCP partner Bob Scott said the pension top-ups may be "reassuring for scheme members" but they narrow "the scope for companies to pay dividends and to invest in their businesses".

Because most companies have closed their final salary pension plans for staff, the number of schemes being adopted that cost less money are increasing, which disregards large numbers of workers who will not have enough savings to retire on, Mr Scott said.

He added: "Put simply, it is unlikely that the benefits emerging from the defined contribution schemes that have been set up to replace defined benefit schemes in recent years will deliver adequate benefits."

Sam Jackson

Money Dashboard