The percentage of U.K. companies operating defined benefit pension plans that are open to new members fell to 38% in 2004 from 56% in 2002, according to a study by Mercer Human Resource Consulting.

In addition, 12% of the companies whose plans are still open intend to close them to new entrants, according to the survey of 1,823 U.K. companies, which was conducted in March 2004. And 15% of that group said they had reduced benefits for future service or intend to do so.

Peter Bowers, worldwide partner at Mercer in London, said employers have been moving away from defined benefit plans for several reasons. Reduced investment returns have increased the deficits of many plans, he said, and the cost of providing defined benefit plans has been increasing as people live longer and bond yields have declined, he noted. These factors, combined with new accounting rules requiring companies to list pension deficits and surpluses on their balance sheets, have made defined benefit pension plans less attractive to many employers, he noted.

Among the companies whose plans remain open, 39% increased employer contributions last year or plan to do so next year, while 29% said they have decided to increase employee contributions. In the United Kingdom, defined benefit plans--known as final-salary plans--often are funded by both employer and employee contributions.

Many of those companies whose plans are closed to new entrants have made policy changes to protect the benefits of existing participants, the survey found. For example, more than one-third--37%--have increased employer contributions or intend to do so, while 28% said they have boosted or will boost employee contributions. However, 15% said they have reduced benefits for future service or plan to do so.

Another recent survey found that the percentage of companies offering defined benefit plans has dropped over the past year.

The survey of 520 U.K. employers, conducted by the London-based Confederation of British Industry and consultant Pertemps Recruitment Partnership, found that 30% of U.K. employers are offering a final-salary plan, down from 43% in 2003.