UK defined benefit (DB) schemes have increasingly undertaken benefit reviews over the last four years resulting in an acceleration of scheme closures, Aon research finds.
The consultant's latest Pension Benefit Design Survey revealed 105 of the 317 DB schemes it surveyed had reviewed their DB benefits, with 60% of schemes now closed to future accrual and a further 21% reducing future accrual in some way.
In Aon's last survey in 2014, less than half (48%) of the DB schemes surveyed - that ranged in size from under £20m to over £40bn - were closed to future accrual.
Benefit design team head Dave Hughes said it is "no surprise" there has been an increase in the number of DB schemes closing to future accrual due to the "high costs of providing DB benefits".
He suggested the increase in schemes conducting benefit reviews may be due to the fact "the demographics of the workforce are changing and many employers have reached a stage where their defined contribution (DC) scheme members significantly outnumber those in the DB scheme".
Hughes also suggested: "For many schemes, DB closure is often the catalyst for a joint strategy between employers and trustees towards endgame planning for fully securing DB arrangements for the benefit of all scheme members.
"In practice, this often means closures are followed-up quickly with a programme of member option exercises and investment strategy reviews, ultimately heading towards a full buy-out."
He noted sponsors are looking to "help pave the way for a positive dialogue with unions regarding the issues faced with ongoing DB provision - and how to find an acceptable solution".
"Our survey demonstrates the creativity being applied to these concessions varying from enhanced ongoing DC contributions, one-off bonus contributions or cash payments, all the way through to one-on-one support from an IFA," he continued.
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