UK - More than 40% of companies plan to review their executive defined benefit schemes due to rising costs, a new study shows.
Mercer Human Resource Consulting’s Executive Retirement Benefits Survey 2002 reveals that companies are starting to recognise the high cost of good quality final salary pension promises and that future cutbacks on pension costs will apply as equally to executives as the rest of the workforce.
Mercer worldwide partner Charles Cowling said: “Employers now realise the need to focus on performance-related pay and the comfort blanket of a generous pension does not deliver improved performance.”
He added: “Executive pensions are under increasing scrutiny, particularly from shareholders who are now taking a greater interest in them, particularly with new regulations due to come into effect soon, increasing the need for information to be disclosed in company accounts.”
Of the companies surveyed by Mercer, 46% expected to see increased use of additional salary in lieu of pensions, while 22% favour funded unapproved retirement benefit schemes (Furbs) that are mainly defined contribution based.
By contrast, just 8% saw an increase in the use of unfunded unapproved retirement benefits schemes (Uurbs), which are the traditional method used to mirror final salary benefits for high earners.
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