More than half of employers have carried out a major review of their final-salary pension schemes in the last year and many are keen to find alternatives rather than close them down, says Watson Wyatt.
The actuarial consultancy, which advises more than 50 of the 100 biggest UK corporate pension schemes, found that 59 per cent of final-salary schemes were reviewed in the last year and 55 per cent made no major changes.
But 32 per cent of the total schemes which were reviewed closed the scheme to new members while allowing existing members to keep accruing benefits and introducing a new scheme for new members.
Ten per cent kept the scheme but with reduced benefits, 2 per cent closed to new members and to future accruals for existing members and 1 per cent offered members the choice of final-salary and another arrangement.
The most popular choice for schemes which closed only to new entrants was some form of defined-contribution arrangement. However, the number opting for change has dropped to 73 per cent from 97 per cent last year.
Watson Wyatt partner Colin Singer says: “There is a widely held perception that most companies are closing their final-salary schemes to new employees and are switching to pure defined-contribution arrangements. There are plenty of employers that are doing this but many others are looking at alternative ways of reducing costs and risk of running a pension scheme, such as increasing member contribution rates, reducing the level of benefits or using alternative structures.”