EMPLOYERS will have to reduce benefits for workers still left in final salary pension schemes, a new report warned today.

Research group Incomes Data Services said closing final salary schemes was "just the start" for many companies.

A growing number of firms have closed schemes in recent years to new recruits because of rising costs.

But the report warned that employers will face a continuing struggle to cope with increased costs.

Report author Helen Sudell said: "The widespread closure of final salary schemes to new entrants is just the beginning of a much bigger movement away from paternalistic provision.

"There can be little doubt that many employers will have to reduce future benefits at some point for those staff still in these schemes."

An analysis of 80 major pension schemes showed that the most common replacement for final salary arrangements were a money purchase scheme or stakeholder pension.

n Taxes on small businesses could be cut by hundreds of millions of pounds under proposals unveiled by the Conservatives.

Shadow Chancellor Oliver Letwin is looking at abolishing the so-called IR 35 tax at a cost of £300m.

The Tories have identified eight specific areas of complex and unfair tax.