All defined benefit pensions schemes at FTSE 100 companies could be completely closed within ten years, according to a survey from Towers Watson.
31 MAY 2013 | THE ACTUARY NEWSDESK: TOM FORREST
The survey shows that 27% of top companies have closed their DB schemes to existing as well as new entrants. This is up from 4% in 2010. In total, 34% of FTSE 100 companies now have no employees earning a DB pension.
Will Aitken, senior consultant at Towers Watson, said that defined contribution schemes have been favoured by large employers for some time. Closure of DB schemes to existing members was not yet the norm 'but we are quickly getting there'.
'If the pace of hard closure seen in recent years continued, all FTSE 100 companies' schemes would be completely closed within a decade. Bigger than expected deficits and the loss of National Insurance rebates from 2016 may lead more employers to do this sooner rather than later.'
Large companies including Axa and DHL are among those that have recently announced plans to close schemes to existing members.
The Towers Watson report also showed that fewer employees were opting out of auto enrolment than expected. It suggested that nine out of ten enrolled employees are choosing to remain within the scheme.
Aitkin suggested that opt-out rates were likely to be far below the one-in-three level originally predicted by the Department for Work & Pensions.
'Employers who have yet to implement automatic enrolment should be budgeting for a high take-up rate,' he said.