National Australia Bank to scrap final salary-based pension scheme

National Australia Bank to scrap final salary-based pension scheme

	Published : Tue, 17 Jan 2006 17:05 By : David Simms Print this Story

LONDON: National Australia Bank disclosed Monday it is proposing to end its final salary-based pension scheme for its U.K. employees from 1 April and instead adopting "career average-based" scheme.

The current retirement plan, which pays benefits on the basis of the last salary drawn, is proposed to be shifted to one based on an average earnings during an employee's career, the bank said in a statement to the London and Australian stock exchanges.

The bank's 8000 plus employees in the U.K. will vote on the proposal between
22 February and 15 March, the bank said.

The bank, which owns the Clydesdale and Yorkshire banks, has a deficit of 426 million pounds in its pension scheme as of 30 September 2005. It said under the proposal it will make a one-off contribution of 100 million pounds to the pension scheme.

Career-average pension plans, which are less expensive than final salary-based plans, are being adopted by many British companies to avoid total collapse of the pension schemes due to the mounting deficits and very low returns on investments made by the pension trusts.

The bank said it is providing for the employees to retire at 60, but they will have an option to retire at 65 so that they can accrue further benefits. The benefits that would be accrued up to 31 March 2006 on the basis of final salary scheme will not be affected.

The bank said it is putting these as proposals to it staff so that its pension scheme can be put on a secure footing for the future.

The employees' union, Amicus, said the proposed plan was the best it could have achieved "through negotiation", adding it was pleased that the staff members are being given the chance to vote on the changes.

National Australia Bank's U.K. chief executive Lynne Peacock said the pension proposals were part of a restructuring programme the bank is planning to implement.