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23rd May 2019
:: Press Office | Press Releases | Decline in defined benefit pension scheme provision continues

Press Release
Decline in defined benefit pension scheme provision continues
The question of the future survival of private sector defined benefit pension schemes has been raised in research published this week by the charity, the Pensions Policy Institute (PPI).
In its 69-page document, released on Monday, the PPI research cites government intervention and regulation as one of four main contributors that have affected the provision of defined benefit pensions in the private sector.
Other factors include inherent uncertainties such as improved life expectancy and investment returns, broader economic factors such as changes to the tax system and changing attitudes to pensions, with scheme members confused about scheme and state pension interaction.
Mike Jones, director of pension education website says, “It is paradoxical that legislation that was initially introduced to protect scheme members’ benefits, such as increases to pensions in payment, and improved preservation of deferred benefits has led to a massive rise in the costs employers are bearing for providing salary-related pensions.”
The research draws attention to the fact that average employer contributions to these schemes have doubled to 22.6% in the five years since 2002, with employee contributions averaging around 6.1%.
Jones points out “The introduction of the NPSS in 2012 could be the final straw for many of the smaller schemes and inevitably some employers may take the opportunity to level down, if not completely close their schemes.”
Others, who may not have realised that auto-enrolment will extend to their defined benefit schemes will get a very real shock when the time comes. To these employers, money purchase schemes look like a much cheaper alternative to what they are currently providing. The research reveals that average employer and employee contributions to money purchase schemes are around half the level seen in salary-related schemes.
As if to prove the point, last week, charity Citizens Advice announced that it is to close its final salary scheme to current and future members. The closure will affect around 380 staff in the UK.
Mike Jones Ltd
PO Box 240
Tel: 0845 123 5670
Mobile: 07730 855 596
Fax: 0871 433 4662 
Notes for editors: provides pension education, information and communication for scheme members, trustees, sponsoring employers and advisers. The website presents facts and information. does not give advice; does not sell pensions, life insurance products, investments or mortgages.
The Pensions Policy Institute (PPI) is an educational charity promoting the study of retirement provision through research, analysis, discussion and publication. The PPI takes an independent view across the entire pensions system.
PPI research document: 
Release date:
9th October 2007

Article details:
Main article 327 words

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Decline in DB provision continues



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