Speaking at the ABI Saver Summit, CBI deputy director general John Cridland said that combining the best features of DB and DC schemes was the most attractive way of encouraging employees to join up to their occupational scheme.
He cites Barclays as an example of how the two can be merged. The Barclays’ occupational scheme offers a guaranteed minimum return, which is a percentage of the employee’s salary, but has a defined-con- tribution structure which ensures that the cost of the guarantee is quantifiable.
He said that employers offering hybrid schemes will be more attractive to potential employees when companies are recruiting, particularly as defined-benefit provision continues to fall and defined-contribution take-up considerably lags final-salary pensions.
Companies that have kept their DB schemes open, such as Diageo, will benefit from being perceived as the employers of choice, he said.
“The Barclays’ scheme provides the benchmark against which companies will need to further and more strategically modernise their provision. Hybrid schemes, which reflect the best of DC and the best of DB, and are open to all are the key to progress,” said Cridland.