Small and medium sized enterprises in the district may be set to suffer financially in the pensions shortfall.

Global companies such as Marks & Spencers, BT and ICI - which have raced to close their final salary pension schemes - are now being joined by SMEs.

A survey, which was carried out by consulting actuaries Hazel Carr, reveals that SMEs are also struggling to fund final salary pension schemes which are expensive for employers to run.

The survey found that a third of SMEs had not sought advice on whether they should close their final salary schemes or wind them up.

The findings were backed by Brian Hallam, a specialist in pensions from Chartford Financial Management, the dedicated investment division of Bradford-based accountancy firm Clough & Company.

Mr Hallam said: "The pensions crisis has affected local companies in much the same way as it has hit the larger national and global companies.

"The bottom line is that final salary schemes have become prohibitively expensive for companies to run.

"And with Britain's biggest employers sitting on a pension fund black hole, which is estimated at more than £10 billion, it's no surprise that the SMEs are also struggling with the cost of final salary schemes."

Final salary schemes mean that the burden of responsibility rests with the employer to pay out a proportion of the employee's final salary at retirement, regardless of the funds available.

Money purchase schemes, which many companies are now favouring, mean that the burden of risk is transferred to the employee.

Otherwise known as defined contribution schemes, money purchase pensions are determined by the amount paid in, investment performance and annuity rate.

Unlike final salary schemes, if the fund performs poorly, then the individual's pension at retirement will not be artificially subsidised by their employer.

Mr Hallam added: "The report has shown that a quarter of SMEs have mirrored the actions of the big companies and chosen to close their final salary schemes.

"However, it is worrying that the report also shows that a third haven't consulted on whether their best option is to close the scheme or to wind it up.

"I would advise local firms that have not consulted on their pension plans to do so now to avoid being caught in the pension trap."

He continued: "We are currently advising many businesses to adopt a drawbridge approach, keeping the final salary scheme in place for long serving employees, but closing it to new members, and running a separate scheme for them, such as a money purchase scheme.

"This does carry its own risks, though - for example, setting up and running two schemes concurrently can mean doubling the costs, and there could be a problem of inequality between staff members receiving different benefits."