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Hundreds of thousands of workers are on the verge of loosing many of their pension benefits, before they are even retired. Cost-cutting big business is taking steps to save money for shareholders at the expense of their own employees.

How? By taking the knife to the company pension scheme.

For decades employees of some of Britain’s largest companies have paid in to their company’s occupational pension scheme. Methodically, systematically and with additional contributions from the company they work for. The goal, a final salary pension when they retire. A pension calculated by taking their final salary multiplied by a percentage relating to the number of years they have worked for the company.

But for employees of a growing number of Britain’s biggest companies, their pension scheme is about to be changed. And not for the better.

This isn’t the first major blow those with pension schemes have been dealt. In Labour’s inaugral Budget, one of Gordon Brown’s first steps was to slash the tax credit received on dividends paid on shares held within a pension scheme. This instantly removed £5 billion a year from Britain’s pension funds and placed it in the hands of the Treasury. The negative effects of the compounding of such a huge loss for those saving for their old age magnified with each passing year.

Now many of those pension funds are about to be hit again . . . and for some on an even greater scale as Big Business switches from final salary schemes to “money purchase”.

With 8.5 million people in final salary schemes, that is a lot of people who could suddenly be expected to either pay more into their scheme or have a much reduced pension when they come to retire. Britain’s big employers on the other hand will end up with more money to pay their shareholders.

Big business can get away with it because, unlike final salary schemes, money purchase schemes do not necessarily require a contribution from the employer and if they do it is either much smaller or discretionary.

Another disadvantage of the money purchase scheme, as anyone with a personal pension will tell you, is that you have to use the fund accumulated to purchase an annuity. And during a period of a falling base rate, an annuity can seem like nothing more than an anorexic interest payment on money you spent a lifetime saving and now is no longer yours.

This is something many now conclude as one insult too many, particularly when looked at through the eyes of the employee who sees themselves losing out so that their employer can massage the end of year figures.

These changes could, in some cases, halve the amount paid out to employees when they retire, leaving many needing to find work or to go without as they deal with a massive drop in their standard of living. Companies including Thorn, Zeneca, Barclays Bank, Lloyds Bank, ICI and Legal & General have all declared their intention to stop their final salary schemes.

Tesco, who continues to record ever higher profits, has told its 170,000 employees that they will have to make large increases in contributions as a result of it apparently finding something better than its own employees to spend its money on.

British Telecom, who operate Britain’s largest final salary scheme, will be operating it no more as they introduce what Philip Hampton, BTs new finance director, calls their new “flexible plan” and apparently saving themselves up to £167 million a year in the process.

But for those in the know these announcements are not a shock. For years companies have been switching their occupational pension schemes from final salary to money purchase. Lower stock market returns have magnified Gordon Brown’s earlier stealth tax and forced many companies to top up schemes to cover any shortfall. The introduction of the Stakeholder Pension has been heralded by many salesmen as the death knell for final salary schemes.

How many final salary schemes will still be in existence twelve months from now, let alone when those currently using them to fund their pensions are due to retire is something that no one can answer. But the trickle of a few years ago is now a torrent.

Each time a company decides to short change its employees by dumping past promises and switching to a money purchase scheme, those employees will be faced with a new and uncertain future. One in which their finances will be less secure and life that much harder.

If you have an occupational pension scheme it is time you asked your employers just how much certainty they are contributing to your future. Because, if they are not contributing, you will have to cut back on your spending today. The alternative is a future in which you don’t get the choice.

With another cut in the base rate by the Bank of England and similar cuts in the mortgage rates by many of the most popular lenders, the majority of borrowers are still missing out on the main benefit these reductions bring . . . Shorter Term Mortgages.

According to a recent article in money.telegraph, not only do more than half of homeowners not know what interest rate they are paying, but 12% of those who knew what rate they were paying were paying a rate greater than 7 per cent, one that can easily be bettered.

Whilst some estimates put the number of mortgages which could be switched to cheaper rates at around the seven million mark, many of those who do switch to a cheaper rate fail to grab hold of the main benefit of doing so … clearing their mortgage debt sooner.

Take Joe and Josephine Public who have a five year old £100,000 repayment mortgage at a rate of 7.2%, costing them £720.94 a month. On switching to a flexible mortgage at 6.00%, costing £655.71 a month, they use the savings to eat out more regularly, go to the cinema more often and make more use of the local health club.

Unfortunately most people are like Joe and Josephine and use the opportunity of a lower monthly payment as an excuse to pay less to the mortgage company, and spend more on themselves. For them, and for those like them, this could prove a costly decision.

The vast majority of people still fall for the mantra chanted by lenders and mortgage salesmen alike, that “a mortgage lasts for 25 years”. Cobblers. The difference in monthly payments on a repayment mortgage lasting 20 years to one lasting 25 years is negligible. The extra few pounds is certainly worth it to remove the shackles of debt five years earlier. Lower interest rates present a similar opportunity to everyone with a mortgage, to remove those shackles - Permanently.

Let’s stick with Joe and Josephine. They have 20 years remaining on their £100,000 25 year repayment mortgage and have successfully moved to a flexible rate mortgage of 6.00% but instead are going to keep up the same monthly payment of £720.94. In so doing, if interest rates remained constant, they would knock 38 months off the remaining 20 years and save nearly £12,000 in interest.

Making the most of lower interest rates doesn’t just apply to those with repayment mortgages. Those who have been subjected to the stress-inducing letters concerning possible endowment policy shortfalls can switch all or part of their mortgage from interest-only to repayment.

Whilst the maths is such that a repayment mortgage means a higher monthly payment than that on a corresponding interest only mortgage, moving to a mortgage with a lower interest rate should enable you to cancel this out. And if you do not wish to remain under the spectre of an endowment shortfall this would appear the perfect solution.

What is more, if the endowment does not perform as badly as the doom-mongers would have you believe, then you will actually end up with cash in your pocket.

If you have an endowment mortgage, which worst case scenario would you prefer to have? One where your policy matures and you are left having to find £10,000 from somewhere to pay off your mortgage, or one where the worst thing that could happen is when the endowment policy matures it clears your outstanding, and somewhat reduced, mortgage?

When the Bank of England lowers the base rate, savings and lending rates fall across the board. Using the corresponding reduction in your monthly mortgage payment and “spending” the saving is not taking advantage of the lower rate.

The future of interest rates is uncertain. There is no guarantee what they will be one year from now, let alone what will happen to them in the next five, ten or twenty years. But whether they rise or fall, the more you owe the more interest you will have to pay. With interest rates currently falling, why fail to seize the opportunity which ensures that you not only have lower interest bills today . . . but much lower interest bills during all your tomorrows.