DB burden too great for smaller firms

For many small- and medium-sized companies, the costs of running a DB pension are becoming a drain on competitiveness and they would be better off switching to a money purchase arrangement

Employers know the value of an effective pension scheme in terms of attracting and retaining staff. Unfortunately, though, for many small-and medium-sized enterprises (SMEs), the defined benefit (DB) scheme has become uneconomic and represents a drain on company resources. Furthermore, these schemes are not always well understood and appreciated by members and so fail to achieve their primary objective. While consultants to large schemes have scope to refine the DB arrangement - for example, by moving to a career average revised earnings (CARE) basis - those advising SMEs report that som...