final-salary

Having an exposure to a final-salary pension scheme is now a drag on a company's share price, not a boon.

Lushly funded final- salary schemes are now broadly closed to new members, in the private sector at least.

JOIN a private-sector company these days and you will be very lucky if you get a pension linked to your final salary.

Another positive-feedback loop in bull markets used to be the final-salary pension fund.

Last week, it emerged that the chairman of Royal Mail's pension trustees is thought to be considering closing its final salary scheme.

Second, employers make smaller contributions to DC schemes than to final-salary plans[2], so pensions are likely to be lower.

As employers were no longer guaranteeing them a proportion of their final salary on retirement. Savers' money went heavily into equities.

One result that we will see is final salary schemes closing at a faster rate than at the moment.

Final-salary, or defined-benefit (DB), schemes are in place for long-serving workers.

Final-salary schemes are hardly ever offered to new employees these days.

A survey in August showed that a quarter of UK companies offered final salary pensions to new recruits.

A rule of thumb is that total contributions need to be around 20% of wages to match a traditional final-salary scheme.

Many highway-patrol officers, for example, were allowed to retire at 50 with 90% of their final salary.

Aviva assumed that workers would desire a replacement rate (pension income as a proportion of final salary) of 70%;

In a final-salary scheme, earnings in the last year before retirement can be crucial in determining the pension;