Sam Dunn: Take control of your pension - no one else will

The new year is only a few days old but already the Furies have been unleashed over what will become a big problem for many in 2006: pension rights.

Plans to water down the retirement deals of staff at the Co-op and Arcadia - two big companies employing tens of thousands across the country - were greeted with angry dismay by unions last week.

In each case, the decision to review terms leaves staff with more saving to do if they want to stay on track for a decent retirement.

The Co-op proposes to switch from a final-salary scheme to an alternative that bases what you get on your "career average" earnings. At Arcadia, whose high-street chains include Topshop and Dorothy Perkins, employees can keep their final-salary deals but face working for another five years before retirement, and must pay more into the scheme from their monthly pay packets.

In both cases, the action might seem severe, but in reality these staff should consider themselves - for now at least - well-off.

The Co-op, critically, has proposed a replacement scheme that still leaves responsibility for guaranteeing a pension with the employer; workers just have to make sure they pay into it.

And at Arcadia, hanging on to even a revised final-salary plan should be seen as a slice of luck. These schemes - which promise to pay out a sum related to what the workers earn, known as "defined benefit" pensions - look set to become a luxury envied by many others.

Compare these workers' fortunes to those of employees at Rentokil Initial. Days before Christmas, they were told that their final-salary scheme would be closed, and replaced with a defined-contribution plan.

Many final-salary plans have already been shut down for new workers, but here the heavy blow was its closure to existing workers too. They, along with new staff, will now have to make new payments into a pension pot, with contributions from their employer and tax relief from the Government.

This money is then invested in funds that grow over a working lifetime into a lump sum - one used to buy an annuity, an annual income for life.

This type of pension pot is becoming more popular with employers, and no wonder: they do not leave a pension deficit to worry about, and all the investment risk is shifted on to the employees' shoulders.

It now looks as if the erosion of final-salary schemes could take hold faster than expected, as other companies gauge public reaction and make their own plans.

Behind this is a mix of our longer lives, low interest rates (making it costly to fund long-term pension liabilities), regulatory pressures and lower expected returns from stock markets.

With more such plan changes on the cards, savers should see 2006 as the year of the pension - and look out for themselves.

Fortunately, new rules come into force on 1 April that abandon today's limits on pension saving and make it easier for people to contribute huge sums to their pension pots. And in March, the Government is to publish its response to proposals made by the Pensions Commission.

If you haven't done so already, make a New Year's resolution to sort out your pension arrangements. If you can get on top of your own provision, you will be better prepared for any unwelcome changes.

s.dunn@independent.co.uk