Commenting on the future of final salary pension schemes

Commenting on the future of final salary pension schemes, Emma Watkins, Director of Business Development at MetLife Assurance Limited stated: “'The closure of the last remaining open defined benefit pension scheme of the FTSE100 is a milestone. History has now come full circle with the future of private sector pension provision reverting back to predominately defined contribution schemes rather than defined benefit or final salary.

“Our research shows the public furore around the viability of final salary schemes is creating a nervousness among members - over half (52%) of those surveyed saying they were concerned that their DB scheme would not exist by the time they came to retire.

“In response to this, the pensions industry has to work harder to explain what is happening and provide information to ensure the right actions are being taken as a result. Our research on the views of employees and employers shows both need a better understanding of what constitutes adequate pension provision and how to achieve, maintain and protect it. When traditional DB schemes do decide that it is time to move into a DC scheme, it is vital that the ensuing benefits are clearly communicated with members to dispel any concerns or confusion.  

“Our research among companies that still have DB schemes (open or closed) found that the majority of companies put huge emphasis on managing pension risks to meet overall business objectives with 76% saying that de-risking the scheme was important.

“But figures never crept above two fifths (37%) when employers were asked about their awareness on the various de-risking methods which they may be open to using.”