Final-salary pension schemes drop to record low
David Woods, 26 August 2008
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Barely a sixth (17%) of final-salary pension schemes are open to new members this year, compared with over a quarter (28%) last year, according to Aon Consulting.
Aon's 2008 Employer Survey found 81% of employers offering final-salary schemes still allow further accrual for members' pensions.
Of the organisations keeping these schemes open to new members, 32% said it would be "too painful" to close them.
June Grant, principal at Aon Consulting, said: "With the number of final-salary schemes plunging to a record low, they have now become gold dust for the 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.
"Financial innovation over recent years has helped scheme sponsors to reduce volatility, she adds, "but the only way to reduce the real level of cost is by reducing the benefits offered. Options to achieve this include increasing the scheme's normal retirement age, reducing the rate of benefit accrual and increasing members' contributions."
