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first choice for people
in pensions |
| Record low for Defined Benefit schemes |
| Only
seventeen per cent of final salary pension schemes are still open
to new members, according to Aon Consulting. The record low, Aon says, means the still open defined benefit schemes are now ‘prized assets’ in the battle to keep employees in their jobs. A combination of factors has been attributed to the difficult conditions under which companies struggle to keep their defined benefit (DB) pension schemes going. Aon’s 2008 Employer Survey found that tighter regulation of pension schemes, volatile market conditions, strengthening of longevity assumptions and fears over future developments in accounting for pensions all contribute to this tough environment. In the same survey last year, 28 per cent of DB schemes were still open to new members, which was also down from 2003’s figure of around 50 per cent. 81 per cent of employers are continuing to allow further pension accrual, and the Survey found that the main reason for this was due to competitive pressure related to employee retention. Previously, the chief reason for maintaining further DB accrual was board resistance. “With the number of final salary schemes plunging to a record low, they have now become gold dust for the employees who still have them,” said June Grant, principal at Aon Consulting. “Employers can turn this to their advantage because the schemes give them a competitive edge in the fight to attract and retain talent.” Grant explained that while the underlying aim of most DB schemes has changed only a little over the decades, “most scheme sponsors would benefit from reviewing their scheme design from a more radical perspective, and one that both supports corporate strategy and addresses employee resistance to change.” - Pensions Age August 2008 |