ABI says cautious investment strategies do not improve scheme safety

The research – which was conducted with Fathom Consulting and modelled a typical UK DB scheme over 90 years – found a 40pc shift from equities to gilts would offer schemes "no significant improvement" in terms of survival chances.

The research also found that schemes which received no top-up contributions from the employer were six times more likely to become insolvent; a plan that received a top-up of its funding gap every three years would go bust only 3pc of the time; and a scheme with no such top-ups would see the risk of insolvency rise to 17pc.

It also found that underestimating member’s life expectancy led to a massive hike in a company contributions and using the risk-free rate to discount future obligations led to better funding outcomes for schemes.

ABI director of research Rebecca Driver said: "This research shows the complexity of the risks associated with DB pension schemes, which are a real challenge for trustees, shareholders and regulators, for example when trying to gauge the strength of a scheme or the impact of a proposed regulatory change."

She added: "This is a particularly important time in this debate, not least because of the worry over equity markets.

"The DWP has just launched a consultation into risk sharing in occupational pension provision, and these findings show the importance of jointly assessing the impact on both schemes and sponsors."