25 February 2008
Companies that switched from defined benefit schemes, such as a
final salary scheme, to a defined contribution scheme (i.e. a money
purchase pension scheme), in an attempt to cut costs are finding it
more difficult to encourage workers to take early retirement as a
result.
This is because money purchase pension schemes do not guarantee
a fixed level of retirement benefits as final salary schemes do and
so the benefits of retiring early are less attractive.
Companies may have to pay off older workers, perhaps by topping
up their money purchase pots, in order to encourage them to
retire.
