The rate at which employers are closing final salary pension schemes has slowed down, research showed yesterday.

A study of 290 final salary schemes found that, while half of firms had reviewed their pension provision during the 12 months to the end of June, only a third of these had closed the scheme to new members while 55 per cent of firms had made no major changes to it.

Consultants Watson Wyatt said when it carried out the same research in the year to June 2002, 56 per cent of firms had closed their scheme to new entrants and only 33 per cent had made no changes.

Final salary pension schemes have become increasingly expensive to offer in recent years due to low investment returns and increased life expectancy.

Many firms have closed the schemes to new members and offered less generous defined contribution ones in their place, under which they only guarantee how much they will pay into the scheme and not what a member's pension will be worth when they retire.

Watson Wyatt also found that, during the 12 months, one in ten companies that had reviewed pension arrangements had decided to continue providing a final salary scheme but with a reduced level of benefits.

Friday August 15, 2003