UK - Tighter regulation, increased longevity and volatile market conditions have collectively reduced the number of open defined benefit (DB) schemes from almost a third in 2007 to 17%, Aon Consulting has claimed.

Figures from the consulting firm's 2008 Employer Survey suggested there is "clear evidence of an increasingly restrictive environment for DB schemes" as 28% of schemes were still open to new members under the 2007 survey , albeit this had declined from around 50% in 2003.

However, the survey of over 100 managers of DB schemes - including finance directors, scheme managers and chief executives - taken from a cross section of scheme sizes indicated 81% of those questioned are still allowing further pension accrual for existing members.

The main reason cited by managers for continued accrual in DB schemes was a "competitive pressure related to employee retention", which surpassed the previous resistance from board members to DB changes.

June Grant, principal, at Aon Consulting, claimed: "With the number of final salary schemes plunging to a record low, they have now become gold dust for the employees who still have them. Employers can turn this to their advantage because the schemes give them a competitive edge in the fight to attract and retain talent."

In particular, 32% of the questioned schemes still open to new entrants said the closure of the DB scheme was "too painful to contemplate" - an increase from 17% in 2007 - which Aon suggested may be partially explained by several recent "high profile" closures to future accrual in the last year.

That said, the survey findings suggested the number of open DB schemes had fallen by 11 percentage points in the last year, from 28% in 2007, following growing concerns over tighter regulation for pension schemes, the continued volatility in investment markets, as well as requirements to strengthen longevity assumptions and the possibility of future developments in accounting for pensions, such as changes to the discount rate.

However Grant claimed while these issues "have all served to increase pressures on employers" with DB schemes she argued "good scheme design can play a vital role in mitigating their effects".

"Financial innovation over recent years has helped scheme sponsors to reduce volatility, but the only way to reduce the real level of cost is by reducing the benefits offered," she said.

"Options to achieve this include increasing the scheme's normal retirement age, reducing the rate of benefit accrual and increasing members' contributions.

Grant pointed out that aside from legislative changes, "the fundamental design of most DB schemes has changed little over the decades", and warned most scheme sponsors "would benefit from reviewing their scheme design from a more radical perspective, and one that both supports corporate strategy and addresses employee resistance to change".

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