Are Final Salary Lump Sum Pensions doomed

Article by Phil

According to Pension Minister Guy Oppenheimer the answer is yes.

Doomed Final Salary lump sum pensions schemes still enjoyed by millions of public sector workers are unsustainable and unlikely to be around in 10 to 15 years’ time according to the government. The latest figures (FT Adviser 15/6/22) showed that these public sector pension costs increased by over 15% in the two years between 2018 and 2020 (so not even up to date!).

The total costs of these final salary lump sum pensions to the government is an almost unbelievable £2.2 trillion.

But which political party will deal with the inevitable fall out with many voters. Some changes introduced back in 2015 have been subject to legal challenges. Measures like career average earnings, designed to stop public sector workers being paid their pension based on their last salary rather than the average they were paid over their career. Putting a stop to the policy of late promotions and pay rises which was allegedly happening on a wide scale basis.

At the opposite end of the pension scale, the TUC are increasingly concerned that what they describe as “bogus” self-employed workers in the so-called gig economy are missing out on pension benefits. Citing the example of Uber workers. The TUC say that more self-employed people should be made to auto enrol into pension schemes. Otherwise, they run the risk of falling into pension poverty in retirement. They estimate that there are over 4 million people working in the gig economy without pension benefits.

You could argue that this disparity between workers is another good reason why Final Salary lump sum pensions are doomed.

The latest figures from Pensions Expert (20th June 2022) revealed that the number of people saving into Defined Contribution pensions overtook those saving into doomed Final Salary Lump Sum pensions, for the first time.

But the figures exposed other issues. According to the analysis the top 10% of pension savers own over 60% of the pension wealth, with average pension pots of over £600,000. On the flip side 50% of the population own less than 1% pension savings, so there is huge pension inequality. That’s even though 57% of people now save into a pension. The highest figure recorded.

Defined Benefit Pension Transfers

Our Pension Advisers at Christina Clegg Financial Planning Services look at the key considerations when thinking about a Defined benefit pension transfer.

If you have any questions about Final Salary Lump Sum Pensions please feel free to give us a call on 01282 614444 or drop us an e mail to

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