Companies renaging on employees' pension deals

Sapphire

Hi,

This is my first post on this forum, although I have been lurking around these parts for some time now, and have found lots of good information, for which many thanks to everyone, including Martin for setting up this excellent site.

I read some disturbing reports regarding company pensions in the Financial Times on Saturday (if I have interpreted them correctly!). What they seemed to be saying was that companies are planning to change the terms of their agreements with (past and present) employees retrospectively, to the companies' benefit. These are not sinking companies, and of course they have very highly paid executives at the top. The reports appeared to have a favourable outlook on such action, and the 'Labour' government does not appear to be attempting to stop it or criticize it.

Can this be true, and would the law allow for this to happen? It would seem to me to be outright theft from employees. I'm also surprised that there is virtually no protest against such prospective action (as far as I am aware).

In view of the above, might it be better to transfer one's company pension to a private scheme, such as a Legal and General pension?

EdInvestor

This is a lobbying effort by the NAPF, representing employers, which wants the Government to reduce Government-mandated requirements on company pensions introduced in the past.

This has already happened to some extent eg inflation uprating of pensions in payment has been reduced.

If you don't like this idea complain ( eg to your MP or your union). Make sure the Government knows you value these pension requirements and you don't want them dropped. But I wouldn't dump a final salary pension at this point as it's just a request not a planned change.

Sapphire

If you don't like this idea complain ( eg to your MP or your union). Make sure the Government knows you value these pension requirements and you don't want them dropped. But I wouldn't dump a final salary pension at this point as it's just a request not a planned change.

I think it is outrageous that such a move can even be contemplated - large companies seem to act with a complete lack of honour towards employees, not to mention what seems to me illegally. I may complain to my MP. I don't belong to a union, and I now work freelance from home. I am, however, concerned about a particular 10-year pension I have with one past employer (major publishing company). I'd rather know sooner than later whether I should transfer out of the company scheme.

Thank you for the helpful response, anyway.

matthewf

I understand the law changed with effect from the 6 April 2005 to the effect that any pension built up within an occupational final salary scheme after this date, only has to be increased when in payment by the lesser of increases in the RPI or 2.5% per annum.

This must be a potential timebomb for many people. If they retire at 60 say and live to 90 or 100 which is not uncommon then surely inflation will exceed 2.5% in some years and their fianl salary pension will be eaten away.

Has anyone any views on this? if we have mega inflation then people's pension will disappear.

Does anyone know if this provision was mandatory for all Pension Trustees to apply or is it discretionary.

I look forward to all views

Thanks

Andy_L

It's the minimum increase they have to give. They can give more, subject to the scheme rules