Around half of UK private sector final-salary pension schemes expect to offload their liabilities to a specialist provider, according to research released by consultancy firm Watson Wyatt, with an aim to manage the cost and risk of their final-salary schemes. Over 40% of such schemes expect to stop existing members from accruing future pension benefits over the next five to 10 years, up from only 6% which have done so currently. Others are increasing member contributions or reducing the rate of accrual. But in the face of volatile investment markets, tougher regulation and growing life expectancy, many are looking to offload their pensions burden to firms such as Legal & General, Paternoster or Pension Corporation.

With only 14% of final-salary pension schemes likely to remain open to new members in 10 years' time, defined-contribution schemes will hold greater importance, Watson Wyatt said. Unlike final salary schemes, defined contribution ones offer no guarantee of the level of income a member will receive in retirement, but the survey predicted that contribution rates into them will rise from their current rate of around 15%, to allow pensioners a better standard of living.

 

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