View more on these topics

Age Concern closes final-salary scheme

Age Concern has become the latest employer to close its finalsalary scheme and slash its contribution levels for new members in favour of a moneypurchase scheme.

The charity estimates it is having to earmark around 21 per cent of the salary budget to maintain the final-salary sch-eme, with an employer contribution of 16.5 per cent and employee contribution of 5 per cent. It says this is not a justifiable use of its campaigning and fund-raising resources.

Age Concern&#39s contributions to the money-purchase scheme will be cut to 8.6 per cent.

The charity has campaigned for bolstering pension provision, believing the basic state pension is key to provision and that employers should be encouraged to make contributions.

Pension experts are warning firms to consider all their options before shutting final-salary schemes, saying there are ways of cutting back on contributions within a defined-benefit framework. They believe employers could consider switching accrual rates from 60ths to 80ths to cut costs.

Scottish Equitable pensions development manager Margaret Craig says: “There are employers struggling with the costs of defined benefits but they do not always want to move away from the whole concept. Switching accrual rates is being considered as a way of reducing costs. Employers should not think there is only one option.”

Age Concern communications director Neil Churchill says: “The cost projections for the final-salary scheme were going to escalate rapidly to a level we could not afford. The new scheme has a good contribution level and will be more suitable for our staff. Our experience reinforces our point that something needs to be done on pension policy.”

•Pensioner poverty, p10

Recommended

HBOS lending soars but profits are down

Profits at banking giant HBOS fell to £1.6bn last year from £1.7bn but net mortgage lending jumped by 183 per cent to £17bn from £6bn.The company blames the fall in profits on the integration costs from the merger of Halifax and Bank of Scotland, the acquisition costs of buying a share in St James&#39 Place […]

Legal & General cuts life policy bonus rates and maturity payouts

Legal & General has cut its annual bonus rates by up to 25 per cent on life policies and maturity payouts by more than 15 per cent.Annual bonuses on life policies fall to 1.5 per cent from 2 per cent in 2000 on the sum assured and to 2.75 per cent from 3.5 per cent […]

GHC – Residential Property Growth Fund

Thursday, 7 March 2002 Type: Investment trust Aim: Growth by investing in equity release schemes Minimum investment: Lump sum £1,000 Maximum investment: None Investment Split: 100% invested in equity release schemes Types of share: Not applicable Isa link: Yes Pep transfers: Yes Redemption date: No Charges: Initial 2.25%, annual 1.2% Commission: None Tel: 0845 7078425

LIA accredited adviser axed as it joins coalition

The LIA has ditched its acc-redited financial adviser scheme, opting instead to join an unprecedented industrywide coalition responding to the FSA&#39s examination review.Despite its high-profile launch in November, the trade body has conceded its plans have been overtaken by the FSA&#39s review and it has abandoned the proposals.It has joined Aifa, Sofa and the IFP […]

Leading Edge – April 2017

There is little doubt 2017 will be a year of political uncertainty. Leading Edge is Royal London Asset Management’s regular review of investment markets. This edition explores some of the impacts that this uncertainty is having on investors, from the pitfalls of prediction within UK equity investing to the dangers of opting for convenience over […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment