10 April 2007
Research by pensions administrators DC Link suggests that
employers who closed final salary schemes and offered defined
contribution schemes instead are now starting to shut these down
because the costs are too high.
DC Link surveyed 200 medium and large-sized firms representing
more than 100,000 employees. Most companies review their pension
arrangements every three years, and the research found that 80% of
companies reviewing their arrangements are now moving to
Stakeholder schemes.
The research suggests that defined contribution pension schemes
are proving too costly for many companies, who are therefore moving
to the Government's low-cost Stakeholder schemes.
Employers usually contribute less to Stakeholder schemes.
Typical employer contributions to a final salary scheme are 16% of
an employee's salary. This falls to 6% for a defined contribution
scheme, and to 4% for a Stakeholder scheme.
