Friends Provident to close final salary scheme

Friends Provident to close final salary scheme

	Published : Tue, 04 Jul 2006 11:15 By : James Rowe Print this Story

LONDON - Friends Provident PLC joined a growing list of British companies to axe its final salary pension scheme for new members. The insurer also told its staff that they would have to work longer to save substantially for their pensions. These changes are set to be introduced in October.

The company took this decision after reviewing its £800 million scheme. A deficit of £19 million was enough to convince the company to take corrective measures. However a spokesperson stressed that the deficit was not the only reason to change its stance. He added that the main intention was to see that the scheme was fully funded and there was no problem for the future retiring persons.

Under the new scheme, Friends is asking members who want to retire by 60 years to increase their contributions by 1 percent per year over the next four years. Those wanting to retire at 65 will have the same package, but can reduce their contribution by 1 to 2 percent by 2010.

Keith Satchell, chief executive of Friends who is due to retire next year said that they were discussing the move with Amicus. "We have been working closely with Amicus [the pensions union] and the pension scheme trustees for some months and are now entering a new phase of consultation with employees about the changes planned for mid-2007," he added. "Our proposals demonstrate our ongoing commitment to the security of the current pension fund and to provide high quality pensions to our employers, both current and future."

However Amicus does not seem to agree with these views and called the measure as extremely disappointing. "This seems to demonstrate Friends Provident are simply 'following the market' and embarking on a cost saving exercise at the expense of staff," it said in a statement. "This is in contrast to the company's vision to lead the market into new territory in service and hugely increased sales, which depends on staff exceeding all previous expectations and performance."