What Determines the Freezing of Defined-Benefit Pension Schemes: Evidence from the UK

25 Pages Posted: 28 Apr 2021

See all articles by Yuan Li

Yuan Li

University of Bath

Wexi Liu

University of Bath - School of Management

David Newton

University of Bath - School of Management

Date Written: February 5, 2021

Abstract

Given the shifting corporate policy from defined benefit (DB) to defined contribution (DC) schemes, we investigate the determinants of so-called ‘freezing’ of DB schemes. We test the reasons of pension freezing and its influence on firm performance, for all FTSE350 companies from 2009 to 2017. We find that pension plan asset is the key factor for determining the freezing of the DB plans and companies tend to close their DB scheme under a good economic state.

Keywords: pension freeze, defined benefit schemes, financial constraints

JEL Classification: G18, G22, J31, J32, J33

Suggested Citation

Li, Yuan and Liu, Wexi and Newton, David, What Determines the Freezing of Defined-Benefit Pension Schemes: Evidence from the UK (February 5, 2021). Available at SSRN: https://ssrn.com/abstract=3835182 or http://dx.doi.org/10.2139/ssrn.3835182

Yuan Li

University of Bath ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

Wexi Liu (Contact Author)

University of Bath - School of Management ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

David Newton

University of Bath - School of Management ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

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