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Employers will be tempted to close final salary pension schemes to existing members as well as new members to curb the increasing costs of provision.
This is the conclusion of a study by Mercer Human Resource Consulting, which finds that costs for a typical final salary scheme, which has been closed to new members, are expected to rise by 25 per cent over the next five years.
This contrasts with an increase of 30 per cent for final salary schemes which remain open to all staff.
"Employers still need to take some hard decisions on cutting pension costs," said Peter Bowers, European partner at Mercer.
"The majority of companies have already closed their final salary schemes to new members, but this was the easy step. The next big issue is how to deal with the current membership."
Mercer predicts there will be a new wave of pension reviews, where final salary schemes are either adapted to reduce employer risks or closed to existing members.
"Closing a scheme to new entrants is a relatively easy decision to take. But employers are fooling themselves if they think this alone will solve the problem of rising pension costs," said Bowers. "Unless companies have a particularly high staff turnover, such a decision will not significantly reduce their long-term pension liabilities."
