Pension change gathering pace

By THIS IS MONEY
Updated: 08:26 EST, 17 July 2008

The retreat from defined-benefit pension schemes is gathering pace, with more than 40% of them expected to have closed to new inputs within the next five years.

All change: The retreat from defined-benefit pension schemes is gathering pace

That is an increase from the 6% today, according to Watson Wyatt's Pension Plan Design Survey 2008.

The proportion of defined-benefit schemes open to new customers is expected to fall to just 14% from 25% over the same period.

The biennial survey of the shape of UK private-sector workplace pensions shows an increased focus on defined contribution schemes, with companies working on increasing inputs.

More than 60% of employers expect their contribution rates to defined-contribution schemes to increase over the next five to 10 years.

Over the past two years, rates have risen by almost 2% of salary to an average 14.7%.

'Kathryn Armitstead, a senior consultant at Watson Wyatt, said: 'A small but growing number of companies are ceasing final-salary accrual for existing members and this trend is expected to accelerate.'