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More than half of defined-benefit pension schemes will be closed by 2012

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More than a million employees in defined-benefit (DB) pensions will have to move into defined-contribution (DC) schemes by 2012, new research reveals.

According to Watson Wyatt, only 9% of DB schemes have already closed to future accrual, but 50% of employers with DB schemes think this will be the case by 2012.

Three quarters of those surveyed by the pensions consultancy have already closed schemes to new entrants and, of these, 48% expect to close the scheme to all members within three years, 28% will keep it open on less generous terms and 25% do not predict any changes.

The 16% of schemes still open to new members is expected to fall to 2% within three years and one of four of these schemes expects to close to new members and future accrual by 2012.

Rash Bhabra, head of corporate consulting at 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 that 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. There is a sense of inevitability that what was once seen as the ‘nuclear' option is starting to become the norm."