Employers are using cash bribes, pressure selling and ultimatums to persuade current and former staff to ditch generous final salary pension schemes.
Workers are typically enticed with a cash lump sum in exchange for the final salary pension benefits they have built up over many years. This money must be transferred into a personal pension, but in most cases they will be worse off in retirement.
Final salary schemes pay a guaranteed pension, based on length of service and salary on retirement. Unlike other pensions, they provide protection against inflation, falling annuity rates and stock market movements.
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They also offer good life insurance cover and benefits for widows and children. Crucially, they tend to pay far more than other types of pension for the same level of saving.
A typical final salary pension would pay an average earner £12,626 on retirement after 20 years, compared with just £5,099 in a typical defined contribution pension, according to financial adviser Hargreaves Lansdown.
