Almost all (90%) of UK employers offering a defined benefit (DB) pension scheme are worried about the impact the perk is having on business.
According to PricewaterhouseCoopers’ (PwC) fourth annual pension survey, employers are worried that trustees will demand extra cash funding for the pension, at a time when the business can least afford it.
A third (34%) of employers intend to take greater control of scheme funding negotiations with trustees this year.
However 17% of employers will take more drastic action and intend to close their final salary scheme to future accrual to existing members this year.
The survey, which sampled 98 companies including 29 FTSE100 organisations, also revealed that employers increasingly want to reduce or remove the risks associated with their pension.
The step 45% of employers intend to take to remove or reduce risk is to change the way the pension is offered to active members, such as reducing pension contributions.
Other steps include buyins (by 40%), buyouts (by 39%), interest rate hedging (by 38%), and inflation hedging (by 37%).
Marc Hommel, partner and UK pensions leader at PwC, said: “Companies increasingly recognise they need to run their pension schemes as they would any other part of the business, which means ensuring appropriate and quality management of cash, risks, costs and value.
“The greatest evidence of this is the increased determination of employers to take earlier and more assertive control of scheme funding negotiations with trustees, together with increasing appetite for risk-reduction strategies – from liability buyouts to longevity hedging.”