Companies that still offer final salary pension schemes, may need their valuers to amend the life expectancy calculation used to determine expected costs. As people are living longer, it makes sense to review the calculation. However this won’t be good news for companies with such scheme as each additional year can increase costs by 3% to 4%.

With increasing final salary pension costs almost inevitable, this could be another nail in the coffin of such schemes. We’ve already seen that Group SIPPs are likely to be the way forward for company pensions and this latest move could speed up the switch.

GlaxoSmithKline (GSK) is leading the charge of FTSE companies in the pension stakes. It is the first to offer employees a group option for self invested personal pensions (SIPPs). The move comes as employees are looking to have a greater say in how their pension is invested and are keen to broaden the spread of investments. SIPPs can invest in a wide variety of investments from shares to listed hedge funds to commercial property.

Brokers and pension providers believe group SIPPs represent the future for pensions and up to half of FTSE 100  companies could have such schemes available to employees in the next five years.