Third of manufacturing firms still offer final salary pension

Nearly a third of manufacturing firms (32%) still have a defined benefit (DB) pension scheme for at least some of their employees, according to research from the manufacturing employers association EEF.

The EEF/CPH Consulting Employment Survey 2009 found that a significant proportion (62%) of DB schemes are now closed to new employees while a further 14% are closed for future accrual to existing members.

The rate of DB scheme closure in the manufacturing sector is lower than across the private sector. A recent survey undertaken by the Association of Consulting Actuaries reported that 87% of private sector DB schemes are now closed to new members and that 18% of them are no longer taking contributions from existing members.

Many of the declining number of EEF members that have retained their DB schemes are now seriously reviewing their position. One in ten manufacturers have plans for further closures, including 3.5% that have DB schemes open to all but with plans to close to new members and 6.5% whose schemes are closed to new members and have plans to close them for future service to existing members.

Nearly two-fifths (38%) of employers in this sector operate more than one type of pension scheme and some form of defined contribution (DC) arrangement is clearly now the most common type of pension scheme for all categories of employee,

The research found that type of DC arrangement used by manufacturers has changed since 1998. Initially, there was a slight increase in the use of both DC schemes and group personal pension (GPP) schemes. However, and particularly since 2002, stakeholder schemes with an employer contribution have become much more common, especially for manual and non-manual employees.

Responses were received from nearly 500 EEF members of different sizes that reflected EEF’s overall membership.

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