According to the latest figures from the Pension Protection Fund, 88 percent of the UK’s 7,400 defined-benefit pensions schemes are facing a short fall. The problem is driven by two major factors – the fall in the stock market and the fact that people are living longer. The deficit in company schemes is now thought to be over £200 billion.

The figures are a stark contrast to the figures two years ago when pension funds were seen with a surplus of more than £100 billion. In the space of a year, the surplus had been wiped out and funds were seen with a deficit of £13 billion. This figure has now increased to a deficit of around £200 billion just one year later.

The massive deficits in pensions funds have forced most companies to close their final salary pension schemes and many believe that companies who still offer final pension schemes may soon close their doors.

Many civil servants enjoy final salary schemes which look to be setting up massive taxpayer liabilities in the future. Some experts reckon that civil servant final salary pension schemes may end up costing over £1 trillion.

Many have criticised current prime minister Gordon Brown for not encouraging people to save. In 1997, dividend payments to pension funds were snatched away. In this year’s Budget, pension plans again were meddled with top-rate tax payers finding that their tax relief had been reduced.

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