Only one in ten DB pension schemes welcomes new entrants
by Gill Montia
A survey of the UK’s private pension schemes has revealed that nine out of 10 defined benefit schemes are closed to new entrants, with one in five even closed to future accruals from existing members.
Research from the Association of Consulting Actuaries (ACA) has also revealed that over half of the UK’s defined contribution schemes are attracting employer contributions of less than 6% of earnings, and less than 4% from employees.
In addition, concerns over the affordability of Personal Accounts, due to be introduced in 2012, are prompting 59% of employers to review their pension arrangements, with a quarter considering benefit reductions.
The ACA is so alarmed at the findings that it is calling on the Government to establish a standing Pensions Commission, charged with promoting good pension provision of all types and identifying legal obstacles that can be a hindrance.
The body warns: “Given much lower investment returns in recent years and longevity improvements, pension outcomes for an increasing number of private sector employees are likely to worsen significantly in coming years.”