Pension concerns for 90% of firms

Published on Sunday 8 February 2009 20:29

NINE out of ten companies are worried about the impact their pension scheme will have on their business, research published today reveals.

Around 90 per cent of firms that still offer a defined benefit pension said they were concerned that the scheme's trustees would ask them to increase their contributions at a time when they can least afford it.

They said the demand for cash would be driven by trustees' perception of the health of UK businesses, as well as a misinterpretation of the pensions regulator's stance on scheme funding.

As a result, a third of companies plan to take greater control of pension funding negotiations than they have in previous years, according to PricewaterhouseCoopers. The research also found a "huge increase" in companies' desire to reduce or remove their pension risks, including by redesigning the benefits that members accrue, and carrying out a pension buy-out with an insurance company.

More than a quarter of companies said they were considering a buy-out in the coming five years, with a further 19 per cent saying they were considering it over a longer timeframe.

Around 17 per cent of companies said they planned to close their final salary pension schemes to future accruals for existing members, while 80 per cent have already closed the scheme to new staff.

But 18 per cent of the 98 companies that responded to the survey admitted they did not fully understand the impact their pension scheme had on their wider business.