Retirement schemes: Final salary pension schemes drop to record low

Retirement schemes: Final salary pension schemes drop to record low

Barely one-sixth of schemes are accessible to newcomers, the research says, down from about a quarter last year and about half five years ago.

Firms questioned by Aon Consulting, a leading pension, benefits and HR consulting firm, for its annual employers' survey blamed tighter regulation, volatile market conditions, greater life expectancy and fears over future developments in accounting for pensions for the fall.

However, the falling number of schemes has meant those companies which still have defined benefit plans have an edge in retaining staff.

The survey found that 81% of firms polled are continuing to allow further pension accrual in their defined benefit schemes. Employers said the chief reason for doing this was competitive pressure to hold on to workers, which has overtaken board resistance to closure as the number one reason for maintaining further defined benefit accrual.

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Commenting on the findings, June Grant of Aon said: "With the number of final salary schemes plunging to a record low, they have now become gold dust for those employees who still have them. Employers can turn this to their advantage because the schemes give them a competitive edge in the fight to attract and retain talent.

"While regulation, improved life expectancy and market volatility have all served to increase pressures on employers sponsoring DB pension schemes, good scheme design can play a vital role in mitigating their effects."

Aon questioned more than 100 managers of defined benefit pension schemes.