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Defined benefit occupational pension schemes are a valuable employee benefit. This paper looks at problems in their design and considers whether it is possible to address them. The risk profile of money purchase schemes is described, with particular reference to employees in less secure employment categories. These considerations are set alongside the requirements employers have from occupational pension schemes. The conclusion is that money purchase schemes fail to meet employees’ needs, in particular at a time when the security and level of state pensions is being progressively eroded. An alternative defined benefit structure is proposed, that is, the revalued career average pension scheme. It is argued that this benefit structure can be made attractive to both employers and employees, as it addresses many of the problems associated with final salary schemes and provides pension scheme members with the security they value.

The purpose of this paper is to explain how the current “crisis” in the UK pension system arose. I argue that it is a result of a combination of changes in government policy and basic instabilities always inherent in the financial system. Policy changes increased the vulnerability of the pension system to those instabilities. The background to these changes and also the frame of reference in terms of which the “crisis” itself is now phrased is broadly neoliberal. Its theoretical roots are in ideas of the efficiency of free markets. Its policy roots are expressed in a series of similar neoliberal policy tendencies in other capitalist states. I further argue that neoliberal solutions to the pension crisis simply offer more of the very matters that created the problems in the first place. Moreover, the very terms of debate, based in markets, financialisation of saving and individualisation of risk, disguise a more basic debate about providing a living retirement income for all. This is a debate that New Labour is simply not prepared to constructively engage with in any concrete fashion.

This paper aims to argue that the accounting standards’ requirements for the valuation of defined benefit pension schemes in the financial statements of scheme sponsoring companies potentially produce an artificial result which is at odds with the “faithful representation” and “relevance” objectives of these standards.

The approach is a theoretical analysis of the relevant reporting standards with the use of a practical example to demonstrate the impact where trustees adopt a hedged approach to portfolio investment.

Where a pension fund engages in asset liability matching and invests in “risk-free” assets, the term, quantity and duration/maturity of which is intended to match some or all of its scheme liabilities, the required accounting treatment potentially results in the sponsoring company’s financial statements reporting fluctuating surpluses or deficits each year which are potentially ill informed and misleading.

Pension scheme surpluses or deficits reported in the financial statements of listed companies are potentially very significant numbers; however, the dangers posed by theoretical nature of the calculation have largely gone unreported.

The purpose of this paper is to evaluate the relative risks and benefits associated with defined contribution (DC) and defined benefit (DB) pension schemes. New regulatory and governance requirements and demographic changes have all significantly raised the costs and reduced the expected benefits to employers of operating DB schemes. In response, many employers have either closed down their DB schemes, closed the scheme to new members and/or to capped any further accruing of benefits for existing members. This decline in DB schemes and their replacement by less generous DC schemes, has been overwhelmingly seen by employees, the general public and Government as an unwelcome development that shifts significant pension risks from the employer onto the employee.

The paper evaluates claims that DB schemes are less risky than DC schemes and, whether their passing ought to be such a cause of concern.

The paper finds that DC schemes are not inherently riskier than DB schemes. Indeed, it is argued that the low operational, governance and regulatory costs and flexibility of DC schemes provide employers and employees with the most cost‐effective means of saving for a pension. In contrast, despite the appearance that the employer rather than the employee is the primary risk bearer in respect of DB schemes, it is shown that this is largely a fallacy. Such an arrangement merely substitutes an employer's covenant for some portion of an independent (of the employer) investment portfolio. This reliance upon an employer's promises to continue to support and fund the pension scheme imposes a raft of additional firm‐specific (i.e. non‐diversifiable) risks and regulatory and governance costs upon the members of both DB and DC schemes.

The paper provides a topical and useful review of the risks, costs and benefits of DC and DB pension schemes in the UK.

The purpose of this paper is to investigate the effect of regulation on both the cost of defined benefit pension (DB) schemes and their effectiveness for human resource management.

The paper initially outlines the factors that have affected the costs of DB schemes. It then reviews relevant theory from the human resources area and details how ongoing regulation has impinged on the use of DB schemes in this area.

Many years of heavy regulation have not only increased the costs of DB schemes but reduced their utility in the field of human resource management. In consequence, the business case for these schemes has been very much weakened.

The undue regulation of scheme design needs to be reduced to allow organizations to evolve pension forms that provide an attractive balance between their cost and their appreciation by employees and hence their utility in the field of human resources management.

The paper proposes a framework for analyzing the business case for DB'schemes. This framework is very convenient for examining the overall effect of changes in regulation.

The paper aims to examine the role of an occupational pension in employees' psychological contracts, the degree to which such pensions influence decisions relating to employee recruitment and retention, and attitudes of managerial employees to the recent Employment Equality (Age) Regulations.

Thirty‐six in‐depth interviews were conducted with managerial employees in order to examine the topics described above.

It is found that the role of an occupational pension in employees' psychological contracts is related to age, and that they play a much greater role in the psychological contracts of older employees. The provision of an occupational pension was found to be more successful in promoting the retention rather than the recruitment of staff. The managerial employees interviewed were overwhelmingly supportive of the introduction of the recent Employment Equality (Age) Regulations, but some expressed scepticism that they would be implemented faithfully by their organisations.

Further research is needed to examine the impact of the widespread closure of defined benefit pension schemes on employment decisions. The small sample size used in this research means no claims can be made to external validity.

The original features of the paper are that the authors apply the psychological contract framework in analysing the degree to which employees value their occupational pensions, employees themselves are interviewed rather than their employers in assessing the impact of an occupational pension on recruitment and retention, and the paper provides an early assessment to the recent introduction of age discrimination.

The purpose of this paper is to present a review which brings together the existing literature on the reasons for the decline in pension schemes.

Adopting a positivist stance, where the reality of man as an adaptor, in a study of systems, processes and change is observed, the authors undertake a review of the existing literature on pensions and pension accounting.

What is absent from the existing literature is a review of the extent to which both a variety and a combination of factors affect companies' decisions to close their defined benefit pension scheme.

The paper provides an holistic overview of the diverse range of literature that addresses the decline in pension schemes.

The article compares the major features of pension provision in the UK and in France. It considers why the UK population appears to be at best indifferent to their system of provision, when overall it is financially secure, whereas the French system, which is faced with increasing costs, receives wide support. The significant differences in provision, apart from the method of funding, are in the level of coverage and the extent of member involvement. The article concludes that, if the UK system took some steps in this direction, perhaps employees would begin to perceive pension provision as the valuable benefit it is, and more employers would be encouraged to introduce, or retain, defined benefit occupational pension schemes.

The purpose of this paper is to investigate the existence of behavioral biases, disposition effect and house money effect in investment decisions of defined benefit pension funds. It investigates the determinants of portfolios by examining whether pensions display risk seeking or risk aversion behavior in reaction to prior gains and losses.

The first research question is to examine the impact of prior period’s return and αs on existing portfolio allocation in equity, debt, real estate and other assets. In order to test this relationship, four separate regressions are estimated using the pooled data. Regression helps in examining the relationship between prior gains with current allocation in four categories of assets of varying degrees of riskiness (stocks, debt, real estate and other assets). In order to investigate the second research question on whether pension funds increase (decrease) their investments in risky (safer) assets due to prior gains and αs, the four variables representing the changes in portfolio allocation for each asset class over one period are employed. These changes in allocation are regressed against the prior year’s actual return, expected return, αs and a set of control variables.

The results suggest significant negative (positive) relationship between prior positive returns and αs with portfolio allocation in risky (safer) assets. Also, there is an increased (decreased) investment in safer (risky) assets following prior period’s positive returns and αs. The findings confirm the existence of disposition effect, while there is no evidence of house money effect.

The portfolio allocation of pension plans provides unique setting to investigate the relevance of behavioral finance and examine the role of psychological biases on risk taking. This study attempts to contribute to the literature by empirically investigating whether the tenets of behavioral finance are relevant in defined benefit pension fund’s portfolio allocation decisions. Specifically, it focuses on the determinants of portfolio choices by directly investigating pension funds’ reaction to prior period’s actual as well as risk adjusted return (or αs – the difference between the actual and expected return).

The claimants who were the Appellants in this case were a Mrs Gorham, widow of Mr Gorham, and her two young children. Mr Gorham had been employed by British Telecommunications plc (BT) between 2nd April, 1991 until his death on 5th September, 1994. Upon joining BT, Mr Gorham was informed by BT that he was eligible to join the defined benefit occupational pension scheme. He was sent a booklet about the scheme, which contained an opting‐out form at the back and stated that if this form were not completed he would automatically be joined into the scheme. He did not complete the form but pension contributions were, at his oral instructions, never deducted from his salary and that fact was apparent from his monthly pay slip. The judge at first instance found as a matter of fact that Mr Gorham believed he was not a member of the BT scheme until October 1992 from which date onwards he believed that he was a member of it. In autumn 1991 Mr Gorham contacted Standard Life Assurance Company (Standard Life)and was contacted by a Mr Cornwell, a customer representative of Standard Life. The Gorhams completed and signed a Standard Life Personal Information Questionnaire which prioritised Family Protection followed by Retirement Planning and House Purchase. Mr Cornwell's recommendations based on the information supplied to him from the Gorhams (who were described in the Standard Life correspondence as client and spouse) included transfer of accrued pensions rights with Mr Gorham's previous employer to a personal pension contract and payment into that contract by Mr Gorham of monthly premiums of £80, along with a small amount of life cover at a cost of £5 per month. In November 1992 Mr Gorham, having read the BT pension booklet and discovering that he could not be a member of both the BT scheme and have a personal pension, telephoned the Standard Life helpline to be told that the BT pension scheme was preferable to a personal pension scheme. At that stage he stopped paying contributions into the Standard Life pension scheme. Despite his earlier belief that he had not been a member of the BT scheme the judge at first instance found as a matter of fact that from autumn 1992 onwards he believed he was now a member of the scheme because of his failure to return the opting‐out form at the back of the BT pension scheme booklet. In fact he was not and pension contributions were still not being deducted from his salary. As a result of his failure to join the scheme either in 1991 or in 1992 when he died in 1994 his widow and children received considerably less than if he had been a member. Mrs Gorham sued Standard Life for breach of tortuous duty of care owed to her and the children and was awarded £114,282.61 for her and the children on the basis that she would have been paid that sum, part of it as trustee for the children, if her husband had become a member of the BT occupational scheme. This sum represented the capital value of Mr Gorham's loss of pension rights but the judge at first instance declined to award a further £120,000 which would have represented lump sum death benefits payable to dependants of BT scheme members which would have been payable had Mr Gorham joined the scheme and had two years qualifying service.