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UK firms using life assurance to replace pension guarantees

Date: Wed, 09 Jul 03 Analysis

LONDON, UK - UK firms are compensating personnel for loss of pension guarantees via the introduction of benefits such as life assurance and group permanent health insurance, according to a new survey.

The 2003 Employee Benefits Survey, which examined the benefits practices of more than 300 companies, has revealed that over half of defined-benefit pension schemes in large firms, and two-thirds in smaller companies, are now closed to new entrants.

The report, published by financial company Momentum, also showed provision of insured benefits had risen sharply, especially amongst smaller firms.

In 76 per cent of such firms 100 per cent of the staff had life insurance, compared with 59 per cent last year. In 2002 less than a quarter of smaller firms provided group PHI to all staff, with this figure now rising to more than 50 per cent.

'A competitive benefits package, valued by staff and well communicated, is far more cost effective than a top-notch benefits package that employees neither understand nor value,' said Paul Johnston, managing director of Momentum.

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