The costs of operating a defined benefit (DB) pension scheme have increased by 37% in the last year, according to the Pension and Lifetime Savings Association (PLSA).
Since 2015, the cost per member of running a DB scheme has gone from £400 to £546.
A 32% rise in fund management and custody costs are seen as key drivers.
- smaller schemes with 5,000 or fewer members have seen an average increase of 63% in running costs, equating to £787 per member
- 10% of DB schemes were open to new members in 2016, compared to 21% the year before
- 4% of DB schemes were open to new members in the private sector.
Joanne Segars, chief executive at PLSA, said:
“Higher operating costs, especially for smaller schemes, combined with widening deficit levels means DB schemes are under pressure as never before.
“We can’t ignore the resulting risk to members’ benefits for all but the most strongly funded schemes and for these members the risk is they will lose 15-20% of their benefits.”
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