End game approaches for defined benefit pensions in manufacturing
1 min read
As if we didn't know it, the end game is approaching for defined benefit pension schemes in manufacturing. According to a study of pension arrangements released today (4 November) by the manufacturers' organization EEF manufacturing companies are increasingly closing their final salary pension schemes to new employees and future service to existing members.
The survey showed that in the face of rising costs and administrative burdens, the proportion providing a defined benefit pension scheme to at least some of their employees has fallen from nearly half in 1998, to just over a quarter now. It also shows that among the rapidly declining number of manufacturers who have retained their defined benefit scheme, an increasing number of them are now seriously considering closing it to both new and existing members.
Furthermore, where companies have retained a scheme they have sought to reduce the risks to their business by increasingly moving from DB to defined contribution (DC) pension arrangements for all categories of employees over the last 10 years. But in contrast to common perception, says EEF, the pace of this change has been slightly faster for senior managers and executives.
Commenting on the findings, EEF head of employment policy David Yeandle (pictured), said: "We are rapidly approaching the end game for defined benefit pensions in manufacturing, with very few employees outside the public sector now able to join this type of scheme. The move from defined benefit to defined contribution pension arrangements is happening for all categories of employees in manufacturing which contradicts the unions' contention that senior managers have not been affected by this change."
