Wednesday 5th July 2006
The solution to the decline of final salary pension schemes may be to encourage risk sharing, the chairman of an industry association has said.
Half of employer final salary pension schemes have been closed to new members in the last three years.
Friends Provident, BAE Systems, the BBC and the Royal Bank of Scotland are some of the organisations that have made major changes recently to their final salary schemes in order to tackle deficits caused, in part, by people living longer and stock market turmoil.
The most common replacement offered for final salary schemes has been defined contribution (money purchase) schemes, which place the risk with the employee.
"The ACA is trying to get a change of climate which will encourage those companies, who wish to do so, to take some of the risk rather than transfer all the risk to employees," Ian Farr, chairman of the Association of Consulting Actuaries said.
"We call these risk sharing schemes."
"Depending on the design of the scheme, the employer can share some of the risk with the employee and we are lobbying the government to make changes to the legislation, which will mean that risk sharing schemes are more attractive to employers than they have been in the past," he added. 
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