Why are pension schemes frozen, and how does a freeze affect the Employer's risk?

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Defined benefit (DB) pension schemes involve substantial risks and costs for employers. So employers have frozen (or closed) their schemes. Using data on firms in the FTSE 100 index, we study the characteristics of employers who hard froze (no new members or accruals) their DB scheme, and the effect of this on the employer's risk. We find that the probability of a hard freeze is a negative function of employer size, operating cash flow and unionization; and a positive function of a previous soft freeze (no new members). We also find that a hard freeze reduces total, unsystematic and credit risk; and increases systematic and asset risk.