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The current economic climate is applying further pressure to companies still operating defined benefit pension schemes.
A recent survey by Watson Wyatt of more than 150 pension practitioners confirmed the trend to move beyond closing defined benefit schemes to new entrants. It indicated that around 25% of schemes still accruing benefits were likely to be closed in the coming months.
Even where schemes remain open, most have already reduced benefits and scope for further reduction is often limited - in order to limit liability more businesses are expected to take the final step and replace defined benefit with defined contribution schemes, which may of course bring its own challenges and put pressure to ensure sensible scheme design is in place.
The survey indicated a belief that there would be reluctant acceptance of closures as people were prepared to make change in order to retain their jobs.
So far closure to current accrual has been limited but Watson Wyatt suggested that if one or two household names made the change, that could lead to many more deciding to follow