PwC’s research shows that 96 per cent of companies are planning changes to both defined contribution (DC) and defined benefit (DB) arrangements.

Nearly all companies are intending to make changes to workplace pensions over concerns about risk, the need to reduce costs and the Chancellor’s 2009 Budget, which 77 per cent said de-motivated companies to provide workplace pensions, whether DB or DC. Significant numbers of employees see DB pensions as unsustainable, with the majority considering ceasing all future accrual for existing employees. However, 88 per cent of private sector employees believe the public sector has an unfair advantage in being able to offer quality DB schemes.

The proposed ‘shake-up’ in DB provision is expanding to include DC offerings as companies re-assess the role of pensions in employee reward and business strategies. Prior to the 2009 Budget only four per cent of employers anticipate no changes to the DB and DC pensions they provide for their employees, as shown in PwC’s previous survey of 157 UK employers.

Marc Hommel, partner and UK pensions leader at PwC, commented: “Our research shows fewer than one in twenty employers expect their defined benefit pension scheme to be open to new members in five years’ time. Further, only one in five are saying they will not freeze future benefit accrual for existing members, potentially leaving UK businesses with a legacy of ‘zombie’ pension funds.”

The Department for Work and Pensions (DWP) has defended its position: “These are challenging times for scheme sponsors but defined benefit schemes are still an important part of the pensions landscape. The Government is committed to helping scheme sponsors through this difficult time, and it is important that people continue to save for their retirement.

“From 2012, automatic enrolment into a qualifying workplace pension scheme will make it easier for people to save. It will mean up to 11 million people gain access to a workplace pension, many for the first time.

“These days, pensions have never been more secure, as the Pension Protection Fund provides a safety net to ensure people are not left without a pension if the employer and scheme run into trouble, when in the past they could end up with nothing.”

- Pensions Age June 2009