Consultants expect new wave of scheme closures

Last week, technology firm Fujitsu Services said it would begin a 90-day consultation with the pension members committee and trade union Unite about proposals to freeze its scheme, which was closed to new members in 2000 (PP Online, May 15).

It said the action was "regretted" but a "prudent step" to enable it to manage pension risk. Unite condemned the move - and said some 4000 employees would be affected.

Punter Southall said the announcement marked the beginning of "another wave of scheme closures".

Principal Simon Banks said: "We know many other companies are considering similar action, and some are in advanced discussions with trustees."

Watson Wyatt agreed. Head of defined benefit consulting John Ball said: "A lot of companies are looking very seriously at whether now is the moment to bite the bullet and call time on their defined benefit scheme.

"We are currently working with many household name companies to review their DB plans and we anticipate seeing more high profile announcements about closure over the coming months."

He added: "With pay freezes and redundancies being discussed in boardrooms across the country, it is harder to justify pension benefits for long-serving staff which the people working alongside them do not enjoy."

Towers Perrin head of pensions Mark Duke added: "Cancelling DB accrual for existing members is a new practice for large organisation, and shows just how challenging the current pensions environment is.

"Firms want to focus on fixing the deficit problem; stop, or cut back, the build up of any further DB provision - with the aim of getting all employees on to the same type of pension plan."