Pensions which workers can expect are being cut by around a third when companies convert final salary schemes to defined contribution ones, research said yesterday.

A survey of 272 company pension schemes found that where companies had axed their final salary schemes they reduced the amount they paid into the new pension by an average of a third, and in some cases as much as half.

The research by Union Pension Services also found that around a quarter of companies had now closed their final salary schemes to new members, up from around 10% when the survey was last carried out three years ago.

Lower investment returns and increased life expectancy have made it increasingly expensive for firms to offer final salary schemes.

Instead, they are switching to less generous defined contribution ones, under which they only guarantee how much they pay into a scheme and not what it will be worth on retirement, leaving staff to shoulder the risk of stock market falls.

Author of the report Bryn Davies said: "Many employers remain committed to final pay schemes.

"But if they switch to a money purchase basis most take the opportunity to cut back on the value of their employees' pension benefits.

"As a result, their workers not only face a higher risk from their new scheme, but are also likely to have a much lower income in old age."