The average large employer in the FTSE 100 has increased the maximum contribution made to defined contribution (DC) pension schemes, according to Towers Watson.

Eighty-eight per cent of FTSE 100 companies provide DC pensions and the average maximum contribution is now 16.5 per cent of salary, up from 15.3 per cent last year, and 13.0 per cent six years ago. This comprises of an average maximum employer contribution of 10.6 per cent and employee contribution of 5.9 per cent.

Paul Macro, a senior DC consultant at Towers Watson, said: "Companies are restructuring their pension schemes so that more of the money they contribute goes to those employees who are likely to appreciate it the most - that is, those who are willing to contribute more than the minimum themselves. This is a trend we expect to continue in the run up to the pension changes that come into force from 2012."

Many companies will have to make design changes to their DC pension scheme to meet 2012 requirements, said Towers Watson, because of the qualifying earnings element to calculate contributions.

The auto-enrolment element of the 2012 changes has already been embraced by 44 per cent of survey respondents, compared to 39 per cent last year, which Towers Watson found is having a positive knock-on effect on take-up rates. Sixty-one per cent of companies now have more than 90 per cent of their eligible employees as members of their DC pension scheme, up from 55 per cent last year.

"DC take up rates are now high for many companies but at the other end of the scale there are some companies with currently low take up rates and the impact of the 2012 changes could be very significant for them. Some 15 per cent of FTSE 100 companies with DC schemes have less than 20 per cent take up rates and currently none of these auto-enrol," Macro added.

Investment options were altered by a third of companies in the past year, and most schemes offer between five and ten fund choices, with these options increasing.

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