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Budget 2013 - KPMG warns over state pension

Accountancy firm KPMG has warned the new state pension will force a dramatic closure of private sector final salary schemes.

Chancellor George Osborne confirmed in his Budget speech today that state pension changes – creating a single tier state pension - will be brought forward to 2016 from 2017. However, KPMG has warned that, whilst this is positive news for individuals, it will speed up the closure of private sector final salary pension schemes.

Gordon Sharp, director in KPMG’s pensions practice, argued that whilst this is a welcome simplification of the state system that will benefit lower earners in particular and the self-employed, it does give employers with open final salary pension schemes 'less time to make necessary readjustments to compensate for the higher national insurance bills that they will face.' 

This measure will put an extra 3.4 per cent on their national insurance bills.  Whilst public sector schemes will be obliged to remain open, this measure is likely to speed up the closure of private sector final salary pension schemes.

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