Over 40% of organisations have closed their defined benefit (DB) pension schemes to future accrual or are currently in the process of doing so, according to research by Aon Hewitt.
The Pension benefit design survey polled 300 organisations with DB arrangements, predominantly in the private sector.
Where organisations are closing to future accrual, around two-thirds are now offering the same level of defined contribution (DC) provision to former DB members as to new hires.
The survey also suggested that over 80% of closures led to employers breaking the link between the DB past service benefits and members’ future pay growth.
James Patten, benefits design specialist at Aon Hewitt, said: “Nearly half of those that have closed to accrual, and indeed many of those that have not, are now taking pension risk management to the next phase.
“In some cases, this might simply be through implementing a liability management exercise such as an enhanced transfer value offer.
“However, in an increasingly uncertain economic environment, we are seeing more schemes trying to take this concept a stage further. A growing minority is considering, or indeed implementing, flight-plan strategies to chart a course for reducing pension risk exposure at appropriate times, and/or ultimately fully settling their liabilities with an insurance company.”
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