In recent years, many leading private sector companies have either closed or curtailed their defined benefit pension schemes. Just a handful of large companies, including Shell, now offer participation in a defined benefit pension scheme.

In part, this is due to pronounced changes in employment trends. Nowadays, there are comparatively few ‘lifers’, who join a company shortly after leaving school or university and remain in post until retirement beckons in their 60s. In previous generations, working for 40 years for a single private sector employer was not particularly unusual.

However, the cost of financing defined benefit pension schemes has become increasingly challenging, especially since people generally are living longer. Moreover, under recent changes to accounting rules, the net liabilities of defined benefit schemes are now effectively treated as debt in company balance sheets. Certain former publicly-owned companies, British Telecom (BT), British Airways (BA) and BAe Systems, are particularly exposed in this respect. Indeed, in recent years, both BT and BA have seen their share prices seriously impacted by their burgeoning pension liabilities – notwithstanding their own poor trading figures.

The drag on share price performance of sizeable defined benefit scheme liabilities is such that many companies are sharply scaling back pension entitlements. BP recently announced that new entrants would not be eligible to participate in its defined benefit pension scheme whilst Barclays plans to go further by closing its defined benefit scheme to existing members.

Perhaps not surprisingly, generous defined benefit pension schemes still prevail in the public sector – but for how long? Given that the unfunded pension liability of the public sector may exceed a staggering £1 trillion, it seems inevitable that the next government - of whatever political persuasion - will be forced to take aggressive action to reduce very substantially these liabilities.