3. Private Sector Open Final Salary schemes. 

Final Salary schemes are good schemes because the relation to final salary tends to link the pension to the index of earnings, up to retirement.  There is a distinction between pension already earned (accrued) and pension that will be earned by future work.  Although some companies try to nibble it away, there is a strong legal position that the benefits already earned cannot be lowered later.  So although the schemes can be degraded, for example by lowering the proportion of final salary that a year's work earns, or increasing scheme member contribution rates, or replacing "final salary" with "average salary", it is only the benefits from future work that can be affected.

Where schemes remain open, this is often due to the strength of representation by the unions.  The strike at Grangemouth, which disrupted fuel supplies in April 2008, was in this category. The Royal Mail scheme is also an example.  

4. Closed Final Salary schemes. 

From the point of view of those who remain in it, a closed final salary scheme is as good as an open one.

4a. IBM Final Salary schemes.

Basing the pension on last years of salary is the characteristic that makes final salary schemes so well-regarded.  Because the salary will tend to move with national average earnings (and perhaps more for the individual through promotion) the pension is largely protected from inflation damage during the period of employment.  Our C-Plan is no longer a genuine final salary scheme because it has lost this characteristic; it is now a some-part-of-final-salary scheme.  No generic name for such schemes has emerged, perhaps because the IBM scheme is the first to make regular salary non-pensionable. 

5. Money Purchase schemes.

For the company, these are basically arrangements to collect contributions from the company and the member, and to pass the monies on to an insurance company.  Good schemes will be better in the choices for the insurance company, in lifestyling choices, and in communications, but both good schemes and bad depend on the insurance companies for investment returns.

The risks involved with money purchase are that your "pot" may not grow big enough in the light of what the annuity providers offer as pension, and that the pension in payment dwindles badly in purchasing power over time.  Too small a pot may be due to the contributions made during employment being too small, or to poor investment returns.  Some control over investment returns is provided by your choices about where to invest at various stages but an overall risk remains.  The question of purchasing power justifies some comment here.  Annuities can be bought where the pension delivered, in pounds, grows with RPI.  The extent to which this protects depends on how costs move with respect to the RPI.  The RPI is intended to reflect costs across all segments of society - the costs for a particular segment like retirees may be significantly different.  

6. Non-existent schemes.

Today, many employees are not in any pension scheme.  A government sponsored money purchase scheme was proposed in 2006 and will become operational in 2012. Newsletter 36 explains.

Pension provision evolves slowly but the trends are apparent.  Public sector pensions will remain good, subject to the need to balance the cost for future taxpayers.  Private sector final salary schemes will continue, but almost all will become "legacies" without active members.  Money Purchase will be the dominant provision, and broaden its scope towards the lower paid.