Scottish Life is urging companies and pension advisers to think carefully before abandoning defined-benefit schemes for defined contribution.
The firm says it has an alternative that will offer the best of both worlds with the benefits of DC and DB schemes.
The defined cash fund, which is part of the company's existing defined-benefit pension range allows advisers to offer companies a guaranteed benefit at retirement for employees while greatly reducing the financial risk.
The DCF offers staff a guaranteed amount at retirement either as a lump sum or as a multiple of earnings to buy benefits rather than being guaranteed a set income in retirement.
An employee can use the fund to arrange benefits in a similar way to a DC arrangement. Scottish Life says this flexibility allows staff the flexibility to include an allowance for a spouse's pension and tax-free cash alongside their own pension.
Group pensions marketing manager Mark Polson says employers should take time to consider their options before dismissing DB schemes.
Polson says: “Many companies with existing defined-benefit schemes are keen to reduce costs and financial risk but they are also well aware of the benefits to employees, and the health of their business of keeping the scheme. Firms are conscious of the backlash experienced by companies that have closed DB schemes so the idea of closing their own does not seem as attractive as it once was.”