The problems with defined benefit pensions, generally known as final salary schemes, has been further highlighted by a report from the Pensions and Lifetime Savings Association (PLSA).
Three million savers in such schemes only had a 50/50 chance of receiving the pay-outs they were promised, with employers struggling to meet their obligations, it claimed.
High-profile cases such as the BHS collapse have highlighted concerns over the future of workplace pensions.
There is a safeguard body in existence called the Pension Protection Fund.
When a fund enters the PPF, and 62 did in the financial year 2016/17, anyone in it who is still working and under retirement age stops accruing benefits though the value of their pension at the point the company goes bust will still increase with inflation.
When they do retire, the annual value of their pension is then capped by the PPF according to the scheme’s retirement age.
In general, they will receive 90 per cent of what they are due.
So, having to rely on the PPF is likely to leave people significantly out of pocket in retirement, particularly deferred members, who don’t get index-linked increases once they start to receive payments from the PPF and high earners whose pension benefits are above the cap.
The PLSA, the trade body for the industry, said one solution could be the pooling of resources into “superfunds”.
This would allow companies to pay a fee to transfer defined benefit schemes, such as final-salary pensions, to a larger fund – which would then have bigger investment opportunities.
But is the PLSA being unduly alarmist?
After all, you can view this from a glass half empty or a glass half full perspective.
And it admitted itself that the majority of final-salary schemes had a sustainable model for meeting future pay-outs.
Pensions consultant John Ralfe was quoted by the BBC as describing the superfund plan as “outrageous”.
He insisted there was “no crisis in defined benefit pensions, so no need for crisis measures”.
The PPF acknowledged in its most recent annual report: “Of course there are considerable risks in the system, as we have seen recently, and some schemes undoubtedly face severe difficulty.”
But it went on: “If a scheme enters the PPF, its members will get more than the scheme’s assets could have otherwise provided.
“They may not receive 100 per cent of what they were originally promised by their employer, but PPF compensation is almost always substantially more than they would have received if the PPF were not there.
“In the recent and ongoing debate about the future of the DB system we have made clear that we don’t believe that a radical overhaul is necessary, nor have we found any evidence of a systemic affordability crisis.”
A total of 128,000 people were receiving compensation from the PPF at the last annual account.
And, given 11 million are in final salary schemes, many more will do so in the future.
Unsurprising then that many have been transferring out of DB schemes. But that can be tricky so take expert financial advice if you are considering such a move.
Employers meanwhile have pumped in an extra £120 billion to try to plug financial holes, but the combined deficit of the UK’s 6,000 schemes remains at £400 billion.
A spokesman for the Department for Work and Pensions said: “Most pension schemes are operating well and the vast majority of members can expect to receive their benefits in full.
“We will continue to work with the industry, employers and scheme members to see what more can be done to increase confidence in defined benefit pensions.”