EUROPE - The forces of driving down costs and risks, as well as cross-border pensions harmonisation, are likely to lead to the withdrawal of defined benefit schemes for existing employee groups, consultancy firm Towers Perrin has suggested.

That said, the Netherlands and Spain are the exceptions to the trend, the consultancy found in its survey of 323 large companies in France, Germany, the Netherlands and Spain, and the UK.

According to the Towers Perrin research,  strong workers' councils in Holland are reluctant to agree to such change, and over 40% of companies now provide an average salary scheme to both existing staff and newcomers.

In Spain, 18% of companies have bucked the general cost-cutting trend on pensions, by increasing their contributions to their defined contribution plans in the last few years. In Towers Perrin's opinion, this is likely to be Spain's top driver for attracting and retaining employees.

"Spain shows potential longer-term insight into the way European pensions may develop," it concluded.

The consultancy also notes DC schemes are not identical across Europe as half of Germany's companies, for example, give workers a DC plan in which their capital is protected, and this trend is continuing for new recruits too.

In Spain, where 73% of companies offer new employees DC pensions, there is no such guarantee, but investment choices of the schemes are restricted.

According to researchers, DC schemes are now the norm for new workers in the UK, with few DB schemes remaining open. "However, hybrid plans are not gaining any significant application," Towers Perrin stressed.

Researchers found the main change to pensions provision for current employees across Europe is a decrease in the value of benefits.

"For example, in the UK 58% of employers operating a DB scheme have raised the level of workers' contributions. And almost two-thirds of German companies have switched to an average salary scheme," said the report.

The consultancy forecasts more change as a consequence of the EU age discrimination legislation over the next three years.

Towers Perrin said it was unable to chart the changing costs of pension plans in France as only 4% of survey respondents were from French companies.