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."