Smaller companies are considering taking pension contribution holidays from their fully-funded schemes, according to Aon Consulting.
Aon says that following Shell's announcement last October that it would take at least a year's holiday from contributions, while employees continue to pay in as usual, and reports that BP is following suit, other companies are investigating the option.
Paul McGlone, principal and actuary at Aon, said: "With schemes being funded more prudently than previously, there is a rational case for considering this strategy. There is, after all, little benefit in continuing to put additional cash into a scheme that is well funded as once cash is in the scheme it can become trapped.
"A contribution holiday can be one way of ensuring a scheme does not become over funded."
Shell's scheme is said to be almost fully funded on a "full buy-out" basis, the most conservative valua- tion basis used by schemes, and to have gained approval from the Pensions Regulator.
McGlone said: "It might not suit all schemes, but nowadays schemes are better able to stand any shocks to the system, and as schemes become increasingly mature, contributions become financially less significant than other factors such as investment strategy."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article