Some employers feel under pressure to meet their defined benefit (DB) pension obligations, research from the Pensions and Lifetime Savings Association (PLSA) has found. Around 11 million people rely on DB pension schemes for retirement income, with most schemes able to reach a sustainable funding position.
However, some employers are feeling the heat with up to 3 million savers into the weakest DB pension schemes given only a 50/50 chance of receiving their full benefits. High-profile cases involving the BHS and Tata Steel highlighted concerns over the future of such workplace pensions.
77% of employers surveyed by the PLSA expressed challenges to running DB pension schemes and 65% would support the principle of consolidation, such as the creation of ‘superfunds’.
Graham Vidler, director of external affairs at the PLSA, said: “Consolidation can benefit a variety of schemes and their members, but there are some key challenges for those who want to pursue this option. The ability to consider simplifying benefit structures has the potential to help these schemes by removing some of these barriers and allowing them take proactive steps to manage their deficits.”