Private sector final salary pension schemes are closing to new staff at the fastest rate on record, with just 13 per cent open to new joiners in 2012, a drop of a third from 19 per cent in 2011 according to the National Association of Pension Funds (NAPF).

In its latest annual survey, which covered a total of 1,018 pension schemes, the NAPF found that these figures were the steepest fall since data was published in 2005 showing that 43 per cent of private sector final salary pensions were still open to new members.

Figures also revealed that the number of defined benefit pension funds closing doors to existing members rose from 23 per cent in 2011 to 31 per cent in 2012. Increasing longevity, poor investment returns, the effects of quantitative easing and low gilt yields have all been cited as the main reasons for this increasing rate of closure.

NAPF chief executive Joanne Segars commented: “The pressures on final salary pensions have proven too great for many businesses. The growing liabilities fuelled by quantitative easing will have been a factor behind the record hike in closures.

"Those starting a new job in the private sector have next to no chance of getting a final salary pension. What was once the norm is now a very rare offer. And those who are currently saving into one may find it gets closed."

However, Segars added that private sector final salary pensions are “far from finished”. She stated that “more than two million workers are still saving into one and they pay the pensions of over four million pensioners. It is essential that the government shows them more support in managing some extremely testing economic circumstances”.

In the defined contribution (DC) space, the survey found that contributions from employers and employees reached a high of 12.5 per cent of salary last year.

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