More pension schemes will close to future defined benefit (DB) accrual over 2009 than ever before, according to Hewitt Associates.

The consultancy firm said a recent survey it had run has suggested that more employers were considering closing DB in 2009 than any other form of benefit change.

"The recent proposals by some major companies to close their DB schemes to future accrual could create a domino effect," said Tony Baily, principal consultant at Hewitt.

"Investors may begin to challenge some company boards as to why, at a time of recession, they continue to offer generous final salary provision when this could be putting them at a financial disadvantage."

Hewitt highlighted that DB closure is not the only option, however, and that closing DB accrual would not be an easy task.

"Employees may become disengaged and trustees may refuse to agree to such significant changes. However, some major employers have realised that it may well be financially more attractive for companies to retain DB provision - albeit on a low cost basis - by capping pensionable pay growth. Capping pensionable pay growth can immediately reduce the deficit and typically companies don't need the trustees to agree the change."

The survey, conducted earlier in 2009, showed that 50 clients of Hewitt had either implemented benefit changes during 2008, or were actively considering doing so in 2009.

- Pensions Age June 2009

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