Nearly Half of UK DB Plans Could be Shuttered in 36 Months

August 17, 2009 ( - New Watson Wyatt research finds half of UK companies with defined benefit pension plans expect to close them to all employees by 2012.

A Watson Wyatt news release said of the 75% of employers with DB plans already closed to new members, 48% anticipate shuttering their plans completely within 36 months. Some 9% of plans surveyed are already completely closed.

The 16% of plans currently open to new entrants is expected to fall to 2% within three years, according to the research. Of the companies with DB plans closed to new members, 28% expect to keep the plan open to existing members but on less generous terms.

A quarter said they do not anticipate any additional DB changes, including 16% who have already cut their plan’s benefit levels, Watson Wyatt said.

“More and more employers are taking a long, hard look at the risks they run through their pension schemes and saying ‘enough is enough’. Companies who were delaying a decision on closing their schemes to existing members until others had stuck their heads above the parapet are now ready to act,” said Rash Bhabra, head of corporate consulting at Watson Wyatt, in the news release. “There is a sense of inevitability that what was once seen as the nuclear option is starting to become the norm.”

Watson Wyatt’s findings are based on more than 250 survey responses, which include many of the UK’s largest employers.