UK - A new trend has emerged with more companies making policy changes to retain their final salary or DB schemes, Mercer Human Resource Consulting claims.
According to the firm, of those companies with DB schemes open to new members, 39% increased employer contributions last year or plan to next year and 29% have decided to increase employee contributions.
Fifteen percent have reduced benefits for future service or intend to do so while only 12% plan to close their DB scheme to new entrants.
Commenting on the apparent trend, Mercer worldwide partner Peter Bowers said: “In the last two years there has been a dramatic fall in the number of final salary schemes open to new members. Now companies are seeking ways to retain their final salary schemes on a more cost-effective basis.
“Final salary schemes are highly valued by employees and can help to differentiate companies when recruiting staff. In future, members, benefits are likely to be lower and their contributions may be higher, to make schemes more affordable.”
Mercer says many DB schemes that have already closed to new members are also making policy changes to help protect members, benefits. More than one third (37%) have increased employer contributions or intend to, while 28% will raise employee contributions. In addition, 15% have decided to reduce benefits for future service.
Key findings showed 92% of DB schemes in the government sector remained open to new members and 78% in the education sector. In contrast, just 24% remained open in the insurance industry and 21% in computer software design and development.
The survey included 1800 UK pension schemes with total funds of £207bn.
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