Only 23% of DB pension schemes open to new members

by Gill Montia

Story link: Only 23% of DB pension schemes open to new members

New figures from the National Association of Pension Funds (NAPF) show the extent to which the recession has continued to take its toll on private sector defined benefit (DB) schemes.

In its annual survey the body, which represents 1,200 UK workplace pension schemes, found that only 23% of schemes remain open to new members, compared to 28% a year ago.

The research also revealed that more schemes than before expect to change benefits in the near future, for new employees and/or current scheme members.

According to the NAPF, pension funds want to see “decisive” government action that includes the issue of more long-dated and index-linked gilts.

Other key findings from the analysis of 300 NAPF scheme members include:

Average contribution rates to DC schemes have remained stable at 11.5%.

Ten per cent of schemes suggested they will increase contributions in future.

DB pension funds’ allocation to equities has continued to fall: the average allocation to equities now stands at 44% compared to 51% a year ago.

Uncertainty remains over the impact of the Government’s 2012 pension reforms with 41% of scheme saying they will maintain their scheme in its current form and auto-enrol their employees into it.

The risk of levelling down to the proposed Personal Account contribution rate remains: 8% of schemes say they are planning to reduce their contributions in 2012.

NAPF chief executive, Joanne Segars, says: “Our survey shows the high levels of commitment employers have in providing good quality pensions for their staff; but the recession has made their job more difficult.”

She adds: “The Government … must take bold and positive action to help support employer-sponsored pensions.”