The announcement by Donald Brydon, chairman of the Royal Mail, that he is ready to close the group’s final-salary pension scheme if the proposed part-privatisation does not go ahead could be seen either as a threat or a simple statement of prudent management.

Exactly what happens next depends, presumably, on the new tack adopted by the chastened Gordon Brown. But if the Royal Mail’s final-salary scheme does disappear, it would not be the only one. In the past week or so three of the biggest corporations in Britain — Barclays, BP and Wm Morrison — have indicated that their commitment to final-salary pension provision is no longer sustainable.

It is perhaps entirely apposite that the end of the era of the predictable, secure pension should coincide with the spluttering of the Brown Government. For in the saga of the British pension’s decline, it was Brown’s decision, as Chancellor in his first Budget to end pension funds’ tax breaks that was a significant nail in the coffin.

So it is now up to the lawyers to read the last rites over our fading pension expectations and set up something more in keeping with the UK’s reduced status in the international pension pecking order.

Things are so bad that pensions experts, such as Robin Ellison, of Pinsent Masons, a former chairman of the National Association of Pension Funds, are investigating the possibilities of registering pension schemes outside the UK. “We are looking at registrations in jurisdictions such as Ireland and Austria,” he says. “This has been possible since the introduction of the European Pensions Directive and it is increasingly attractive. The UK must have the most complex tax legislation and regulation in the world, running to thousands upon thousands of pages. By contrast, other EU member states have much clearer arrangements. Employers just can’t tolerate this dysfunctional system any more. Either they find something simpler or they’ll just walk away from it.”

Robert West, of Baker & McKenzie, and a former chairman of the Association of Pension Lawyers, agrees that leading EU jurisdictions with double-taxation treaties in place — rather than pure tax havens — would be attractive alternatives to the UK.

In any case, he believes that what we are now seeing is the start of a phased withdrawal from the final-salary commitment. “There are lots of companies primed and ready to go,” he says. “It begins with the closure of the scheme to new entrants and then moves on to terminating further final- salary accruals for existing staff. Until recently, companies have been unwilling to face the flak that this would attract but a head of steam has built up and I think that many employers will now go for it.”

As it happens, it is not especially difficult from a legal perspective to introduce these changes. “Pensions have traditionally been provided on a discretionary basis,” Maria Stimpson, of Allen & Overy, says. “Basically this means that employers usually reserve the right to amend or terminate benefits at any time — although any benefits earned to the date of the change will be unaffected.”

However, in common with other employment-related legislation, strict processes of consultation and timescales are built in to any change in status. Faith Dickson, of Sacker & Partners, the pensions specialists, says that there are many different schemes in place and it is necessary to look carefully at their precise terms. The consultation exercise with staff is essential, however, and Dickson and her colleagues emphasise to their clients how important it is to “truly listen” to what the staff have to say and consider any alternatives that they may propose.

The other critical players in this drama are the pension scheme trustees. Their primary role is to defend the established interests of existing pensioners and the previous contributions of current workers. Jane Samsworth, who heads the Lovells pensions practice, explains that what the company must be able to do is to persuade the trustees that because of changed circumstances (such as new market conditions or increasing longevity) the final-salary scheme is not viable or not affordable in the medium to long term. “The trustees must focus on protecting existing benefits. Any amendments to employment contracts relating to pension arrangements in the future will not be of concern to them.”

So the presumption among pensions lawyers is that in terms of the law, any changes to the final-pension scheme can be achieved relatively easily as long as the rules are followed. Even employee opposition may be less severe than expected. “When the facts are presented to them in stark terms, many employees will accept the inevitable need to end the final-salary approach,” Samsworth says.

So what lies ahead?

Stimpson points to the growing popularity of career average and defined contributions schemes but adds that in today’s world she rules nothing out. There will, in any case, be a new fourth pension from the Government in the form of the introduction of the personal account in 2012. Not, it must be said, that anyone I spoke to was putting much store by it. “It’s nightmarishly complicated,” Samsworth says. So here we go again.

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