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According to new research from MGM Advantage, there are now two million fewer people in defined benefit (DB) pension schemes than there were in 1995.

If these two million people had remained in defined benefit plans, their employers would have paid around £7.77bn a year into their pensions.

However, according to MGM Advantage, now these people are in defined contribution (DC) schemes the contribution from their employers is now around £3.24bn a year.

A growing number of companies are not only closing their final salary pension schemes to new employees, they are also doing this to existing staff.

As a cost cutting exercise, many employees are being moved into DC schemes, where the contribution from employers is significantly lower.

MGM Advantage said that the average contribution from an employer to a DB pension is around 15.6 per cent of a person's salary, compared with 6.5 per cent to a DC plan.

For someone on an average salary, this would mean a difference of around £2,266 a year.

Aston Goodey, sales and marketing director at MGM Advantage, said: "Final salary pension schemes are moving inexorably into extinction. Employers are increasingly looking to move staff on final salary pension schemes to the cheaper option of defined contribution plans.

"Come retirement, this means that people will have smaller pensions. They need to be more focused on their financial planning and also ensure that when it comes to buying an annuity, they seek professional advice and shop around for the best deal for them."