The UK manufacturing industry is waving goodbye to defined benefit (DB) pension schemes, with 62 per cent now closed to new members and a further 14 per cent closed to future accrual, says EEF and CPH Consulting.

Research of 500 companies - undertaken by EEF, the manufacturers' organisation, and
sponsored by CPH Consulting, provider of talent management solutions for small,
medium sized and emerging companies - found that since 1998 the proportion of
manufacturing firms offering a DB pension to some of their workers fell from almost
half to just over a quarter. The EEF/ Consulting Employment Survey 2009 stated that
rising costs and administrative burdens are to blame.

"We are rapidly approaching the end game for defined benefit pensions in manufacturing, with very few employees outside the public sector now able to join this type of scheme," explained David Yeandle, head of employment policy at EEF. "The move from defined benefit to defined contribution (DC) pension arrangements is happening for all categories of employees in manufacturing which contradicts the unions' contention that senior managers have not been affected by the change."

The Association of Consulting Actuaries (ACA) recently reported that 87 per cent of private sector DB plans are now closed and 18 per cent of them no longer open to future accrual from existing members - higher than the figures reported for manufacturing - but EEF/CPH Consulting believes this is because of the traditional strength of the DB scheme within manufacturing.

Jerry Wright, joint managing director of CPH Consulting, pointed out that for many years manufacturing companies have used their DB pension scheme to attract new employees. "Clearly this is no longer the case and we are working with our clients to ensure that they are offering a competitive range of other employee benefits to ensure they can attract the right talent to their business."

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