Employers boosted their defined benefit (final salary) pension schemes with an extra £4.5 billion in contributions in the first nine months of 2004 - a 31% increase over the same period in 2003, according to figures produced by the Office for National Statistics.

The extra contributions were mainly intended to meet pension fund deficits, but with longer life expectancy and pension funds shifting from share based investments to lower risk vehicles such as bonds, pension scheme deficits have remained largely unchanged.

Employee contributions to schemes increased to just over £4 billion in the sme period from £3.9 billion. The employer contributions increased dramatically from £14.1 billion to £18.5 billion. Stephen Yeo, a partner at actuarial firm, Watson Wyatt, said that companies are now contributing nearly five times as much as employees.

Few final salary schemes are being offered by employers today. Instead, defined contribution, or money purchase schemes are offered as an alternative. Such schemes are seen as easier to administer and cheaper for employers.

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