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The high cost of maintaining defined benefit (DB) plans is making life difficult for recession-hit U.K. firms to restructure themselves in preparation for an economic recovery, a recent survey reveals.

The latest Pensions Survey by the Confederation of British Industry (CBI) and Watson Wyatt finds that 73% of respondents expect that businesses will have to increase contributions to their DB plans, while 33% felt that pensions provision had reduced competitiveness by obstructing internal reorganizations or mergers and acquisitions. Thirty-eight percent said that business investment had been hit.

The survey also found that 80% of directors believe most DB plans will close to existing members over the next few years, with employees moving into defined contribution (DC) plans. Half of the plan sponsors polled expect to transfer some of their pension liabilities to an insurance company in 10 years’ time.

However, employers remain committed to providing pensions. Eighty-three per cent say there is a strong business case for offering them, but in order to have an idea of overall costs, DB pensions are being closed in favour of DC plans.

“Businesses are not stepping back from helping their workforce plan for retirement,” says John Cridland, deputy director general with CBI. “Even during this tough recession, firms recognize the importance of offering their staff a good pension. The current regulation of final salary schemes is obstructing business reorganization, often without making those pensions any safer. During a recession it is vital that firms are able to restructure and realign to strengthen the business and prepare for future growth.”

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Social media on the rise

A majority of companies polled plan to increase their use of social media in 2010, according to a survey.

Watson Wyatt’s 2009/2010 Communication ROI Study of 328 companies from various regions around the world finds that almost two-thirds (65%) of companies plan to increase their use of social media in 2010. Overall, 78% of global respondents have increased their electronic communication in the last 24 months, and 55% have increased face-to-face communication. Meanwhile, 48% have decreased their print communication over the past 24 months.

“Companies continue to explore using social media as the next communication frontier,” says Kathryn Yates, global leader of communication consulting with Watson Wyatt. “Today’s workers are looking for authentic, timely messages that address how business changes affect them personally. Social media engages employees in real time and on a variety of topics.”

However, some employers report common hurdles to implementing social media, with 36% citing a lack of information technology support or inadequate technical capability, 40% indicating limited knowledge of the topic and 45% of companies citing the lack of staff or resources.

Copyright © 2019 Transcontinental Media G.P. Originally published on benefitscanada.com

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