A Watchdog has told employers to stop using the recession as an excuse for cutting pension contributions while still paying dividends to shareholders.

The UK Pensions Regulator (UKPR) said that while employers with final salary pension schemes should be allowed some “breathing space” during the economic downturn, they should still treat trustees fairly.

The UK pension market is in dire straits, with companies’ pension deficits totalling an estimated £191 billion, compared with a deficit of £49 billion a year ago.

Figures released earlier this month showed that 90% of the 7,800 pension schemes measured by the Pension Protection Fund were in the red. A separate report found that a quarter of major private sector firms expected to close their final salary pension schemes within the next few years.

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