Only six per cent of FTSE 250 firms continue to demonstrate significant loyalty to their defined benefit (DB) pension schemes, according to new research from Pension Capital Strategies (PCS).

The firm’s annual report illustrates that just 144 FTSE 250 firms provide any DB provision at all to their employees, of which only 86 are still providing DB benefits to more than a small number of current employees (excluding those companies whose DB service costs are less than one per cent of payroll). Of those 86 firms, only 15 are still providing DB benefits to a significant number of staff members.

“Despite an increase in confidence in equities over the past 12 years – with improved performance resulting in better funding positions – we are firmly of the view that the next two years will see the death of the overwhelming majority of further provision in private sector final salary pension schemes,” said Charles Cowling, managing director of PCS.

“More than ever before, pension liabilities are impacting decisions in the boardroom. Faced with a challenging business cycle, it is not surprising that companies are reacting by closing down their final salary pension schemes.”

The research also found that there has been a £1bn improvement in the estimated total deficit of FTSE 250 pension schemes, compared to the position a year ago.

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