Employers offer pension plans for two main reasons: paternalism and skills market competitiveness. Recent changes in legislation and business practice have prompted the scrutiny of the underpinnings for such a management tradition. Identifies several relevant factors that derive from: field work undertaken by the authors; the Pensions Act 1995; and recent changes to corporations tax. It is argued that what has emerged is a sharply focused trade‐off, relating to the asset and liability characteristics of employer‐based pension schemes. This questions the sustainability of all types of pension plans, and thereby has a place in strategies affecting financial planning and business development.
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