Brick maker Ibstock is consulting on closing its defined benefit (DB) scheme to future accrual, potentially affecting 40% of the company's UK staff.
The scheme had an actuarial deficit of £19.4m on 30 June, according to its interim report published on 5 August. This is in contrast to a £17.4m surplus recorded on 31 December 2015 on the same actuarial basis.
The company said the sudden shortfall was due to an increase in liabilities following a reassessment of the scheme's demographic profile. It also blamed falling bond yields in the wake of the vote to leave the European Union.
The consultation, which will last for at least 60 days, will involve around 850 of the firm's 2,100 UK-based employees.
Ibstock declined to comment until the consultation is complete.
The brick maker is the latest in a string of companies considering closing their schemes to future accrual as DB provision becomes more expensive in the low gilt yield environment. The Post Office, Royal Mail, Ultra Electronics and M&S have revealed they are planning to close their schemes to future accrual.
Meanwhile, Nestlé attempted to close its DB scheme and move members into a defined contribution (DC) alternative. However, union pressure led to the company backtracking on the proposal and instead agreeing changes to keep the DB scheme open at a more affordable rate.
Nearly every trustee is confident of the next stage in their scheme’s strategy, despite almost an equal number being forced to consider replacing plans within the prior 12 months, according to research by Barnett Waddingham.
Companies could be overstating their pension liabilities by up to £60bn due to their life expectancy assumptions, according to XPS Pensions Group.
Defined benefit (DB) schemes that provide GMPs must revisit and, where necessary, top-up historic cash equivalent transfer values (CETVs) that have been calculated on an unequal basis, a landmark court judgment said last week.
Regulators must act now to impose some "proper regulation" to stop another defined benefit (DB) transfer advice disaster, saysTim Sargisson.
Opportunities for defined benefit (DB) schemes to pursue investment approaches that help repair the UK’s economy cannot stand in the way of improving member outcomes, Aegon says.