Only 40% of UK-based corporates boast final salary schemes that remain open to new members. This figure stood at approximately 66% a year ago, although the figures, collected by Mercer HR Consulting, also shows that final salary schemes are not disappearing altogether.
Money purchase pensions are increasingly being offered as an alternative to final salary schemes, and 75% of top UK corporates have now opened money purchase pensions, compared to 55% last year.
"A striking development in recent months is the number of employers re-committing to final salary schemes, but rebalancing the costs," says Tim Keogh, European partner at Mercer. "Many companies are changing the cost structure of their schemes, such as increasing employee contributions or adjusting the rate at which benefits can be built up."
The closure of final salary schemes, notes Keogh, will help to decrease future liabilities, although will have little effect on current deficits. The aggregate deficit for FTSE350 companies stands at around $90 billion. "Clearly, pension deficits are not uniformly distributed amongst all companies. For a substantial minority of organisations, managing this deficit is a major issue," adds Keogh.
The findings are based on the December 2002 annual reports of the FTSE350 - the top 350 companies listed in the UK.