UK - Final salary schemes continue to be effective and should not be axed in favour of more high risk solutions, according to consultants William M Mercer.
In a court case scenario held in Edinburgh, over 50 local employers were invited to pass judgement on final salary pension schemes. The seminar, organised by Mercer, aimed to examine the increasing costs of final salary pension schemes and consider whether money purchase schemes were a more effective solution.
The spectacle, which involved jury members, and witnesses for the prosecution and defence, was prompted by the growing number of companies now reviewing whether to continue with their traditional final salary pensions.
The enormous burden of regulation and increasing costs are behind local companies' decisions to examine their current schemes. Many are now reviewing whether other arrangements, such as money purchase and stakeholder pensions, might be more effective in meeting their needs, said Mercer’s Jim Doran.
The seminar concluded that final salary pensions continued to be effective as an employee benefit, and that their cost volatility could be controlled.
Doran added that there was also concern that under other types of pension the financial risks are transferred from employers to employees “who are less well equipped to manage them.
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