UK - Companies would retain their final salary schemes if they received tax breaks from the government, new research concludes.
A survey by Mellon Financial Corporation revealed that some 80% of firms said they would not close their schemes if they received extra tax credits.
And some 60% also said they would raise employer contributions if the tax burden was eased.
Head of technical services at Mellon’s human resources and investor solutions group, Kevin LeGrand, said: “The cost burden imposed by the government on schemes has steadily grown over the years and our results suggest that the government should look at urgently reversing this.”
The survey of 229 employers – Key Pensions Issues Survey 2003 – found 81% were against compulsory provision, 79% would change or review their pension arrangements in the next five years, and 70% of those with DB schemes had considered switching to DC.
LeGrand called on the government to help boost employer confidence.
“The government needs to lead the way with effective, targeted measures such as bureaucracy reduction and further tax incentives.”
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.