Finance News: Pensions crisis leads CFDG to moot salary scheme closures

Charities should consider freezing pensions benefits, closing schemes to new members or withdrawing them altogether, according to a new report on the sector's pensions crisis by the Charity Finance Directors' Group.

The report says that many charity pension schemes have run up large deficits over the past five years, while liabilities have been rising because of increased longevity.

With pension costs likely to remain high, trustees should review their pension arrangements, the umbrella body argues.

"Trustees might think about changes to, or freezing, benefit structures," the report states. "They might consider closing schemes to new members or closing them altogether, although this is now likely to be prohibitively expensive. Each option will have advantages and disadvantages, so trustees will need a full analysis of the costs and benefits of each."

The report, The charity pensions maze, asserts that there is no 'quick fix' to the current problems and the recent rise in the stock market will not make pension deficits and costs simply vanish.

The sector has taken divergent paths over how to deal with pension deficits.

Over the past two years, Save the Children, Age Concern, Help the Aged and Oxfam have all closed their final salary pension schemes to new employees.

But other charities including the RSPCA, Citizens Advice and Christian Aid have reaffirmed their commitment to defined benefit schemes, despite the stock market decline.

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