Pulling the trigger on defined benefit schemes

Pensions

As the costs of providing defined benefits schemes rise employers will seek to reduce the level of guaranteed benefits and perhaps only offer defined contribution schemes

The level of employer contributions made to fund a defined benefit pension scheme can be split into a number of separate components: the expected cost of providing benefits for future service, less any employee contributions; contributions required to make good any deficit in respect of benefits that have accrued in the past - most schemes have such deficits today; the cost of levies payable, primarily the levy to the Pension Protection Fund (PPF); the cost of administering the scheme; and the cost of any insured death in service benefits. The first two components tend to be by far the mos...