DB may be in decline but there are still millions of members to consider.
The financial fallout of Brexit is claimed to be the final nail in the coffin for defined benefit (DB) pension schemes, with deficits rising to never-seen-before highs.
The truth is, it's just the latest 'final' nail in the coffin; see also the end of contracting-out, freedom and choice in pensions, increased longevity, auto-enrolment etc. and so on.
It has, however, led me to think about the end point for DB, as it is undoubtedly coming, and what this means for dyed-in-the-wool admin people like me.
When I first started in the pensions administration industry nearly 20 years ago, it was DB as far as the eye could see. Occupational defined contribution (DC) was fairly rare.
All of the schemes I worked on were open to future accrual and the majority were still open to new members. I even got to join a DB scheme myself!
Over time, DB schemes stopped allowing members to accrue for future service, opening DC sections under the same Trust instead. Then, for cost and / or governance reasons, contract-based DC, rather than Trust-based DC, was the popular way to go.
This activity increased in pace until, all of a sudden, the rare beast is now the DB scheme still accruing future service, with those open to new entrants practically extinct (at least in the private sector).
My observations on the schemes I worked on mirrored my own pension scheme membership. DB is a long-forgotten memory and the future is DC.
I look back and feel lucky that I was able to work on schemes that had both DB and DC sections. It exposed me to the very different world of DC administration which needs a time-and-process driven mind-set compared to the complex, history-rich and calculation-based DB.
With the ever-declining number of DB schemes, is it possible to work out how long specialist DB administration will be needed?
For a scheme closed to new entrants, you can simplistically work this out by looking at the youngest member and calculating how long he is likely to live. This could be many decades from now.
The reality, though, is that now the majority of DB schemes are closed, Trustees and sponsors are on a de-risking flight path which will ultimately lead to buy-out well before the last of their pensioners or dependants will stop receiving their pension.
So, how long is left? Without a crystal ball, it's not possible to give an exact answer.
However, there are still thousands of DB schemes out there with millions of members, many of which will be around for at least 30 years, and some much longer.
The future of retirement provision may be DC, Lifetime ISAs or something completely new.
One thing for certain is that the expertise of skilled DB administrators will be needed by clients and members for many years to come.
Written by Joe Anderson,Business Development Manager at Trafalgar House.
