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The government green paper, published last month, announced a big shake up of the UK's pensions system. It proposed scrapping the fixed retirement age of 65, upping of the minimum retirement age to 55 and simplifying pensions tax. Most experts agreed that these reforms aren't enough to diffuse the pensions time bomb and the year ahead will see further wrangling between employers, employees and government about what each pays toward retirement. Employers are likely to spend 2003 ensuring they aren't left footing the bill – in fact the process has already begun.

The general trend is clear: employers are looking to reduce the cost of pension provision – and that means more of the burden is shifting onto employees. Last year contractors such as Kier, Mansell and Galliford Try closed their generous final salary schemes to new employees, and the trend looks set to continue. According to the National Association of Pension Funds, the number of final salary schemes that closed to new members in 2002 almost doubled from its 2001 figure.

And it is not just ordinary employees who are seeing the value of their pensions fall. According to actuary Mercer Human Resource Consulting, two out of five employers intend to review their policies on executive pensions and possibly replace final salary schemes with cheaper money purchase schemes (aka defined contribution schemes). "Executive schemes are under increasing scrutiny, particularly from shareholders," says Charles Cowling, partner in the consultant.

The main difference between final salary and money purchase schemes is that the latter leaves most of the risk with the employee. But that's not their only unattractive feature. Last November, Mercer Human Resource Consulting published a survey that showed employers have cut contribution levels into money purchase schemes from 6.3% to 6% of staff salaries since 2000. Considering that stocks fell by 20% over the same time, the picture is very troubling. The TUC is calling for the green paper to include compulsory minimum employer contributions. But even if all this is done, experts fear that pension provision will still be inadequate.

On average, the equivalent of 9.3% of members' salaries goes into a money purchase scheme. Most final salary schemes need funding levels of 18% of salary. So the question is, who will mind the gap?