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DC schemes could be next target for unions, says leader

Union strike action over defined-benefit schemes could spill over to companies running defined-contribution schemes, warns giant civil service union Unison.

Head of pensions Glyn Jenkins told delegates that poor returns on defined-contribution schemes will lead to increased wage claims.

In a warning to employers not to underestimate the pitfalls of cheaper money-purchase schemes, Jenkins argued that poor performance by defined-contribution schemes will be apparent to employees when statutory money-purchase illustrations are introduced next spring.

He said employees will expect employers to make increased payments in the years when defined contributions perform poorly in the same way that employers have benefited from pension holidays in years of high equity growth.

Jenkins, whose union has 1.3 million members, said: “As well as a pension scheme valuation every year, we could also be having a strike on pensions every year. Some of the firms that have not moved from def-ined-benefit to defined-contribution schemes have stayed put because they are aware of the hidden costs of defined contribution.”

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