DISCUSSION PAPER PI-0710
DB or not DB-the Choice of Pension Plan Provision by Employers
The literature into employee choice in relation to DB and DC pension schemes
is substantial; however, there has been little work carried out on the factors
influencing the choice of scheme offered from a firm’s point of view.
In particular, analysis has not been carried out on the types of firm for
which DC provision might be more likely. I this paper, I seek to address this
issue by looking at the characteristics of UK firms offering and failing to
offer DB pension schemes. I carry out univariate and multivariate analysis
on an unbalanced panel and also on an aggregated cross-sectional data set.
I find strong evidence that "value" firms are more likely than "growth"
firms to offer a DB pension scheme, suggesting that the lower cost of a DC
pension scheme is more attractive than the financial opacity of a DB pension
scheme to a "growth" firm. Weaker evidence is also found for differences
in a number of other variables.