The continuing trend over the last 12 months amongst defined benefit schemes has been the decision by sponsoring companies to make special one-off employer contributions to reduce funding deficits (27 per cent of schemes, but down 7 points on a year ago), to implement scheme salary sacrifice (11 per cent) and to move towards more flexible retirement regimes (see Table 36).

The year ahead shows these trends continuing, with many defined benefit schemes anticipating further one-off contributions (13 per cent) and increases in regular employer contributions (14 per cent), as well as further scheme closures to new entrants (9 per cent) and to future accrual (15 per cent) and with more opting for salary sacrifice arrangements (14 per cent).

The closure to future accrual, where a further fifth of schemes are 'undecided' is particularly concerning for members, as inevitably this trend must mean more and more existing employees will see their future pension benefits relying on arrangements where levels of contributions are generally lower and pension outcomes more uncertain. This emphasizes the ongoing need for Government to consider ways it can help more, to allow sponsors to cap and ideally reduce the cost of future accrual in defined benefit arrangements. For instance, removing the obligation to index both deferred and members' benefits irrespective of economic conditions might be one option.

Future trends for defined contribution schemes highlight a big rise in schemes looking at introducing new investment options 51 per cent (from 41 per cent) and particularly introducing salary sacrifice 36 per cent (compared to 9% in 2009) alongside a further 14 per cent likely to go contract based in the next 12 months.

Over one in ten schemes are also trailing switches to contract-based and master trust arrangements, suggesting economies in regulation, simplification and cost are of ongoing interest, perhaps with an eye on 2012 reforms and beyond.