Defined benefit pensions facing a crisis

FOUR out of five defined benefit pension plans are failing to meet statutory funding standards while a sixth are likely to be wound up due to difficulties.

Pension consultants Mercer said half of defined pension schemes must submit a recovery plan to the Pensions Board by June 30.

They said half of all these schemes will change their benefits or their employee contribution rate this year and one in four have either implemented or are strongly considering an increase in the required employee contribution rate, generally from 5% to between 8% and 10%, or in some cases even higher.