Ninety-seven per cent of the UK’s defined benefit pension schemes with assets over £1bn are now closed to new members, Barnett Waddingham has reported.

According to Barnett Waddingham’s fifth annual survey, only three per cent of DB schemes are open to new members, with 60 per cent closed to new members and 37 per cent closed to future accrual. A higher number of career average revalued earnings schemes, 29 per cent, remain open to new members.

The survey also highlighted that 57 per cent of schemes have a deficit on their company accounting basis, a decrease from last year, which recorded 67 per cent of schemes to be in deficit.

The average annual contribution made by sponsoring employers to fund their scheme deficit was around £60m, while deficit contributions varied from around £0.75m to £338m.

Moreover, Barnett Waddingham noted that the number of transfers out from schemes grew over the period. Of the top 10 largest schemes in the survey, with assets in excess of £10bn, the median year-on-year increase in cash transferred out was 80 per cent.

In addition, the average 3 year investment return was around 7.6 per cent per annum and the average PPF levy paid was £2.6m, corresponding to 0.03 per cent of scheme assets, Barnett Waddingham said.

Barnett Waddingham partner Andrew Vaughan, commented: “The private sector’s big schemes are the industry’s trendsetters. The activity we are seeing in liability management programmes as a result of the pension flexibility changes in 2015, as well as the evolution of liability-driven investment strategies which are now often focused on targeting a bulk annuity transaction, will inevitability work their way down to smaller schemes.

“Only a handful of big defined benefits schemes with assets over £1bn remain open to new members and the number closed to future pension accrual is increasing year on year. Many of these will ultimately be looking to the insurance market to transfer risk through buy-outs or buy-ins, medical underwriting and longevity risk transfers. We have seen a significant amount of activity in these markets in the last year and we expect this to continue.”

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