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Alumasc // Archant Media // Arup // Balfour Beatty // Barclays // Barratt Developments // BP // British Airways // BT // CIPD // Corus // Costain // Daily Mail & General Trust // Dairy Crest // Fujitsu UK // Goodyear Tyres // IBM UK // Interserve plc // ITN News // ITV Television // Jaguar // Johnson Matthey // Land Rover // Linklaters // Mitchells & Butlers // Wm Morrison // NSPCC // Pirelli // Royal Bank of Scotland // Royal Mail // Steria // TRW UK // TT Electronics
Alumasc Group
|
Active scheme members |
127 |
| Total scheme members | 660 |
| Capital value (£m) | £33m |
| Deficit (£m) | unknown |
| Closed to new members | unknown |
| Closed to future accrual | unknown |
| Reason for 2009 closure | unknown |
| Replacement scheme | unknown |
More details to come.
Archant Ltd Pension & Life Assurance Scheme
| Active scheme members | 1,308 |
| Total scheme members | 3,567 |
| Capital value (£m) | £133.4m |
| Deficit (£m) | £43m |
| Closed to new members | 1998 |
| Reason for 2009 closure | n/a; Capped pensionable salary |
The media company, owner of over 100 local and regional newspapers, magazines and websites has announced plans to cap contributions to its DB scheme.
The cap will mean that while members can still contribute to the scheme, contributions will be based on their wage at December 2009. Any contributions higher than this limit, which is yet to be finalised and is subject to consultation, will be paid into the company’s DC scheme instead.
In contrast to many union responses (see below examples), the National Union of Journalists has accepted that the shortfall is beyond the control of Archant and that the proposals are “a reasonable attempt” to save the scheme from full closure.
Arup pension scheme
| Active scheme members | |
| Total scheme members | |
| Capital value (£m) | |
| Deficit (£m) | £230m |
| Closed to new members | Consulting |
| Closed to future accrual | Consulting |
| Reason for 2009 closure | Deficit; fairness of global benefits |
| Replacement scheme | DC |
Global engineering consultancy Arup has proposed sweeping changes to its UK pension schemes in order to deal with a mounting deficit.
The company, which helped design the Sydney Opera House as well as Olympic venues in Beijing and London, will also close its existing defined contribution (DC) scheme, replacing both with a new DC arrangement from April 1, 2010.
Pension manager Rosemary Mount told PM the new DC arrangement would ensure equality for all employees in line with global benefit policy, as well as potentially boosting take up of the pension scheme. Employee contributions to the new DC plan will start at 3% of salary, and Arup will contribute double this figure, up to 10% of salary.
A consultation with employees is underway and is expected to be completed by mid-January.
Arup is owned as a trust on behalf of staff, meaning DB scheme funding impacts on employees more directly than in other businesses and regardless of whether employees are members of the DB plan. It is also the last company in the engineering consultancy sector with an open DB scheme.
Balfour Beatty Pension Fund
| Active scheme members | 10,211 |
| Total scheme members | 39,150 |
| Capital value (£m) | £1,700m |
| Deficit (£m) | £587m |
| Closed to new members | Yes |
| Reason for 2009 closure | n/a; Capping pensionable salary |
The engineering and construction firm recorded a loss of £22m in its half-yearly report, compared to a £57m profit in 2008. The deficit of the firm's pension fund now stands at £587m.
Some active members have been contacted regarding a possible cap on pensionable salary from January 2011. Balfour Beatty said this could potentially reduce the deficit by as much as £115m. In addition, the firm will pay an extra £1m a month from April 2010.
Barclays Bank plc UK Retirement Fund (hybrid scheme)
| Active scheme members | 65,122 |
| Total scheme members | 188,514 |
| Capital value (£m) | £9,500m |
| Deficit (£m) | £2,200m |
| Closed to new members | Yes |
| Closed to future accrual | April 2011 |
| Reason for 2009 closure | Sustainability |
| Replacement scheme | DC |
Unite said that Barclays workers were “incensed” at the decision to close the scheme and threatened strike action, but discussions between employees and Barclays proved fruitful and concessions were made, including delaying the closure and staggering DC scheme contributions.
Barclays makes major concessions to DB members - Pensions Week
Barratt Developments Pension & Life Assurance Scheme
Property developers have been particularly badly hit by the recession and damage to the housing market, and so it is not surprising that a major developer’s pension scheme has been hit.
There are few details available, but chief executive Mark Clare told Reuters that as selling prices and production dropped so costs had to be cut. The firm’s debt currently stands at £1.28bn.
BP plc Pension Fund
| Active scheme members | 12,219 |
| Total scheme members | 69,132 |
| Capital value (£m) | £13,800m |
| Deficit (£m) | Believed to be in surplus |
| Closed to new members | June 2009 |
| Reason for 2009 closure | Limit liabilities |
| Replacement scheme | unknown |
Increased life expectancy would appear to have caught the company off guard, making the scheme “a big financial burden to leave to shareholders”. This is despite the scheme posting a 134% surplus in 2007, and also predicting a surplus, albeit smaller, for 2008.
A spokesman for BP told PM: “The decision was based on the future long-term liabilities of offering a final salary scheme, not a reaction to recent economic turmoil. Pensioners’ life expectancy is rising, while staff numbers are declining.”
British Airways Pension Scheme (APS) and New Airways Pension Scheme (NAPS)
Airways Pension Scheme
| Active scheme members | 1,940 |
| Total scheme members | 32,678 |
| Capital value (£m) | £6,520m |
| Deficit (£m) | £1,000m |
New Airways Pension Scheme
| Active scheme members | 31,499 |
| Total scheme members | 69,333 |
| Capital value (£m) | £6,600m |
| Deficit (£m) | £2,700m |
BA has just published its results for the first half of 2009, which revealed a record loss of £292m. The enormous size of the pension scheme's deficit could potentially scupper the proposed merger with Iberia, but the Spanish airline is said to be content so far.
BA gives schemes extra lift with new measures - Pensions Week
BA gives up guarantee for more cash - Pensions Week
BT Pension Scheme
| Active scheme members | 71,520 |
| Total scheme members | 344,896 |
| Capital value (£m) | £39,700m |
| Deficit (£m) | £9,400m |
The BT scheme, the second biggest scheme in the UK, has reported the second biggest deficit to match. This is subject to investigation by the Pensions Regulator after questions were raised in June about calculations used in the scheme’s valuation.
The scheme has now moved to reduce liabilities through making changes to individual members’ benefits.
More information is available from www.btpensionsreview.net.
BT members choose level pension offer – Pensions Week
Chartered Institute of Personnel and Development (CIPD)
| Active scheme members | 175 |
| Total scheme members | |
| Capital value (£m) | |
| Deficit (£m) | |
| Closed to new members | January 2010 |
| Closed to future accrual | 2012 (consulting) |
| Reason for 2009 closure | Liability management |
| Replacement scheme | DC |
Jackie Orme, CIPD chief executive, said CIPD needed to rein in liabilities to ensure that the financial position of the company was not compromised, but emphasised that the company was keen to improve on the current 55% take up rate for its existing schemes.
The new DC arrangement will offer employee contribution levels of 4%, 5% or 6%, with corresponding employer contributions of 6%, 8% and 10%. The CIPD also said it wants the new scheme to qualify for the NAPF's Pensions Quality Mark.
Corus UK
| Active scheme members | 23,481 |
| Total scheme members | 160,582 |
| Capital value (£m) | £9,400m |
| Deficit (£m) | |
| Closed to new members | 2009 |
| Reason for 2009 closure | unknown |
| Replacement scheme | unknown |
The larger of the steel manufacturer's two schemes has closed to new members, prompting talk of strike action from unions.
The National Trade Union Steel Co-ordinating Committee, which represents all unions within Corus, said that it would "expose Corus' motivation... to close the pension scheme completely".
A statement said: "Members have seen thousands of job losses across Corus, their bonus has been removed and now the company is attacking their pensions. Corus should be fully aware that the unions are saying enough is enough. Representatives have called for ballots for industrial action right across the company, so ultimately our members will decide."
Costain
| Active scheme members | 1,076 |
| Total scheme members | 7,324 |
| Capital value (£m) | £387m |
| Deficit (£m) | £76m |
| Closed to new members | Yes |
| Closed to future accrual | Consulting |
| Reason for 2009 closure | |
| Replacement scheme |
The engineering firm, which helped build the Channel Tunnel, has started a consultation over possible closure. It is also continuing to match dividend payments with an equivalent contribution to the scheme.
The scheme's deficit has more than doubled in the last year despite the company making a half-year profit of £6.9m and, according to one report, landing £1bn worth of new contracts this year. The firm says it will increase monthly contributions to the scheme from £500,000 to £900,000 until April 2010.
Daily Mail and General Trust
| Active scheme members | 4,899 |
| Total scheme members | 21,928 |
| Capital value (£m) | £1,700m |
| Deficit (£m) | |
| Closed to new members | 2009 |
| Reason for 2009 closure | Liabilities; cost |
| Replacement scheme | DC |
Rising life expectancy and "other cost pressures" have forced the newspaper owner to close its scheme to new members. A report in the Guardian said that the company would also be making changes to future benefits in the new year.
A statement from DMGT said: "In future, new employees will be offered a defined contribution pension plan, in line with employees in other DMGT divisions. DMGT believes its pension arrangements remain generous and compare favourably with other media businesses."
All media companies are suffering from a downturn in advertising revenue, but the Daily Mail's regional and local papers appear to have borne the brunt of the economic crisis, with revenues falling by a third in the second quarter of 2009 alone.
Dairy Crest Group plc
| Active scheme members | 4,100 |
| Total scheme members | 17,300 |
| Capital value (£m) | £677m |
| Deficit (£m) | |
| Closed to new members | Yes |
| Closed to future accrual | April 2010 |
| Reason for 2009 closure | Improving scheme funding |
| Replacement scheme | DC |
The UK’s “leading chilled dairy foods company” agreed two buy-in deals with Legal & General in December 2008 and June 2009 to aid the scheme’s funding and security. The deals have now secured all benefits of members who retired before August 2008, and Dairy Crest has additionally agreed to pay £20m per year into the scheme starting in October.
Alastair Murray, group finance director, said that the company was “committed to improving the fund’s financial position, and we are making good progress in this respect”.
In the last week of September, it was confirmed that 3,500 members will have the option to transfer to the DC scheme when the DB plan is closed to future accrual.
Fujitsu Services ICL Group Final Salary Scheme
| Active scheme members | 4,650 |
| Total scheme members | 18,229 |
| Capital value (£m) | £1,900m |
| Deficit (£m) | Believed to be in surplus |
| Closed to new members | 2000 |
| Closed to future accrual | Consulting |
| Reason for 2009 closure | Risk management |
| Replacement scheme | unknown |
The consultation finished at the end of October, but clashes with unions over the reasons for closure have delayed pbulication of the results.
A statement from Fujitsu said: “While [closure] is regretted, it is a prudent step towards managing the pension risk.”
Unite, the union, said at the end of September that a recent ballot revealed 87% of members are in favour of strike action and 96% are in favour of industrial action short of a strike. Fujitsu’s Japanese parent company has upped its profit estimates for 2009 to ¥90bn (£0.56bn), despite Q1 losses of ¥29.1bn (£0.18bn). This estimate will rile the unions, who already slammed the decision to hold the consultation, saying the Fujitsu was a profitable company with no underlying financial problems.
Goodyear Dunlop Pension Scheme
Goodyear Dunlop has four DB schemes, all closed to new members, and catering for almost 20,000 members. The UK branch of the tyres and car supplies manufacturer will introduce a new DC scheme for its members from January 1 2010.
The company is currently in consultation with trustees, trade unions and members about the new scheme, which would replace the firm’s existing hybrid and DC plans, with around 900 current members switching payments to the new scheme.
Mark Brickhill, managing director of Goodyear Dunlop UK, said the company wanted to provide employees with “a valuable, sustainable alternative pension plan”. He said the firm needed to “remove risk in the future pension funding to help us deliver future investment and growth for the company”.
IBM United Pensions Trust Ltd: IBM Pension Plan/IBM IT Solutions Pension Scheme
| Active scheme members | 14,150 |
| Total scheme members | 39,999 |
| Capital value (£m) | £5,300m |
| Deficit (£m) | |
| Closed to new members | 1997 |
| Closed to future accrual | April 2011 |
| Reason for 2009 closure | Cost pressures |
| Replacement scheme | DC |
Following a consultation with employees, the scheme closure has been delayed until April 2011 and current death and ill health benefits will be retained.
IBM said the existing DC scheme will be enhanced with additional employer contributions. The scheme was closed to new members in 1997, and the US parent company closed its scheme to future accruals in January.
Closure to future accrual in the UK is in line with global company policy, but workers’ union Unite accused the company of using the recession as a cover to cut pension costs and “erode future pension benefits for long serving and highly skilled people”.
Peter Skyte, Unite national officer for IT and communications, condemned the changes as “doing little to alter the substance of the company’s original proposal” and blasted IBM’s “vastly inferior” DC plan, which, ironically, was recently among the first schemes to receive the NAPF’s Pension Quality Mark.
The Association of Members of IBM UK Pension Plans (AMIPP) questioned the legality of the decision, claiming that the US parent company appointed American executives to the board of the UK arm to ensure that the scheme changes went through in line with global policy “rather than English notions of fair play”.
The full notice to AMIPP members can be read on the association’s website, www.amipp.org.uk. Twitter users can follow AMIPP updates via the account IBMpensionUKhit, and keep updated with PM news as well.
IBM considers end to future accrual - PensionsNews.com
Interserve plc Pension Scheme
| Active scheme members | 1,815 |
| Total scheme members | 9,229 |
| Capital value (£m) | £418m |
| Deficit (£m) | £250m |
| Closed to new members | 2002 |
| Closed to future accrual | 2009 |
| Reason for 2009 closure | Deficit |
| Replacement scheme | unknown |
For more details, see this story from Pensions Week.
ITN Ltd Pension Scheme
| Active scheme members | 549 |
| Total scheme members | 1,669 |
| Capital value (£m) | £240m |
| Deficit (£m) | £40m |
At the end of June, ITN decided to drop its active fund managers to cut costs as it looks to plug its deficit. A spokesman for ITN also said the decision should "reduce asset volatility".
In May the Times reported that ITN directors were uncertain of the long term stability of the company and they expected the deficit to rise still further, having increased by more than £17m since 2007.
An ITN spokesperson told PM: "The company makes regular ongoing contributions to the pension scheme. As part of the 2008 triennial valuation process, we are currently in discussions with the trustees to agree an appropriate funding plan for the scheme, and expect a solution will be reached by March 2010."
Getty Images was reported to be interested in a takeover bid earlier this year, but the pension deficit was a sticking point, as is often the case. ITN are said to be in discussions with trustees about a recovery plan, but other options are likely to be considered.
ITV Pension Scheme/ITV plc Pension Scheme
| Active scheme members | 2,650 |
| Total scheme members | 29,117 |
| Capital value (£m) | £2,600m |
| Deficit (£m) | £646m |
ITV is suffering similar final salary scheme difficulties to its news provider (see above), and has opened consultations with employees.
Most recently, the fund has siad it will considered using one of its digital subsidiaries, SDN, as a contingent asset to help plug its deficit. It has not been helped by the global advertising slowdown which is affecting the media industry.
In a letter to DB members ITV said: “[We are] offering pensioners of the defined-benefit section the opportunity to receive an uplift to their pension now in exchange for giving up future annual increases. Other members of the defined-benefit section will be given this when they retire.
“Part of the money (around 40%) generated from members taking up this offer will be kept by the scheme to help improve funding; the other part (around 60%) will be used to pay for the uplift for those members who accept the offer.”
The scheme website (www.itv-pensions.com) outlines the proposals, including a cap on pensionable salary of 1%. The consultation period began on July 27 and results and a final decision are expected in November.
Contingent assets deal a win-win for ITV - Pensions Week
Jaguar
| Active scheme members | 7,080 |
| Total scheme members | 17,438 |
| Capital value (£m) | £1,600m |
| Deficit (£m) | unknown |
| Closed to new members | 2009 |
| Reason for 2009 closure | unknown |
| Replacement scheme | unknown |
More details to follow.
Johnson Matthey
| Active scheme members | 3,252 |
| Total scheme members | 10,381 |
| Capital value (£m) | £820m |
| Deficit (£m) | unknown |
| Closed to new members | unknown |
| Closed to future accrual | unknown |
| Reason for 2009 closure | unknown |
| Replacement scheme | unknown |
More details to follow.
Land Rover
| Active scheme members | 8,072 |
| Total scheme members | 12,465 |
| Capital value (£m) | £1,500m |
| Deficit (£m) | unknown |
| Closed to new members | 2009 |
| Reason for 2009 closure | unknown |
| Replacement scheme | unknown |
More details to follow.
Linklaters
| Active scheme members | 430 |
| Total scheme members | 797 |
| Capital value (£m) | unknown |
| Deficit (£m) | unknown |
| Closed to new members | Yes |
| Closed to future accrual | 2009? |
| Reason for 2009 closure | unknown |
| Replacement scheme | Group personal pension (GPP) |
More details to follow.
Mitchells & Butlers plc Pension Plan
| Active scheme members | 1,466 |
| Total scheme members | 27,760 |
| Capital value (£m) | £967m |
| Reason for 2009 closure | n/a; Capped pensionable salary |
A pensionable salary cap of 2% has been imposed by the UK pub and restaurant owner, parent of the Harvester and All Bar One chains. It has informed members of its DB scheme that “pressures arising from increased life expectancy, low returns on equity investments and increased regulatory costs” have all affected the scheme’s funding.
Wm Morrison 1967 Pension Scheme
| Active scheme members | 7,064 |
| Total scheme members | 13,321 |
| Capital value (£m) | £382m |
| Deficit (£m) | unknown |
| Closed to new members | 2003 |
| Closed to future accrual | June 2009 |
| Reason for 2009 closure | unknown |
| Replacement scheme | Career average |
The supermarket operator said it consulted fully with employees before the closure. At one point the scheme deficit reached £300m, according to the Times, although the company has since injected £200m into the scheme.
NSPCC Pension Fund
| Active scheme members | 1,500 |
| Total scheme members | 2,213 |
| Capital value (£m) | £33m |
| Deficit (£m) | £20m |
| Closed to new members | Yes |
| Closed to future accrual | Dec 31 2009 |
| Reason for 2009 closure | Cost pressures on charity work |
| Replacement scheme | unknown |
Unsurprisingly, not-for-profit organisations are finding it increasingly difficult to cope with the economic climate. The National Society for the Prevention of Cruelty to Children laid off 150 staff earlier this year as well as introducing a pay freeze. It now plans to close its DB scheme to future accruals, which the firm says will cut the deficit by £30m.
Community, a trade union representing NSPCC staff, has hit out at the charity’s management and claims the scheme is sustainable. A statement from the union said it was “disappointed” at the decision, which was taken “regardless of the evidence that the existing final salary scheme could be managed by contributions from members”.
NSPCC finance director Ian Chivers said that the scheme has a deficit of £20m even after the decision to close to existing members, and that the NSPCC “could not afford to let these liabilities grow further without risking an impact on our services and the critical work we carry out to help vulnerable children”.
NSPCC to cut deficit by £30m - Pensions Week
Pirelli Tyres
| Active scheme members | 1,457 |
| Total scheme members | 5,466 |
| Capital value (£m) | £148m |
| Deficit (£m) | unknown |
| Closed to future accrual | Jan 1 2010 |
| Reason for 2009 closure | Cost pressures |
| Replacement scheme | unknown |
Dominic Sandivasci, managing director of Pirelli, said: "It is a difficult decision for the company to take, but it is being taken in order to best protect the future of the company." He added that disappointing investment returns and increasing longevity had caused liabilities to grow "dramatically and unsustainably".
Royal Bank of Scotland (RBS) Group Pension Fund
| Active scheme members | 78,674 |
| Total scheme members | 103,660 |
| Capital value (£m) | £17,900m |
| Deficit (£m) | £800m |
| Closed to new members | Yes |
| Reason for 2009 closure | n/a; capped pensionable salary |
As PM has suspected for a while, RBS has decided to make changes to its final salary scheme. It plans to introduce a cap on pensionable salary of the lower rate of either 2% or inflation, as it tries to reduce its £800m deficit (this figure rose to around £2bn last year). RBS employees taking early retirement from December will only get one week’s salary for every year of service as a lump sum, rather than two weeks’ salary, the current level.
The bank insisted that the moves aim to strike a balance with reducing further liabilities while protecting existing members from more drastic measures.
Unite has described the move as a “body blow” to RBS staff, and union representatives are to meet on August 27 to decide an appropriate response. It has accused the bank of punishing workers for “a crisis for which they hold no responsibility”.
The recent concessions made by Barclays following consultations with employees should reassure Unite that negotiations can work, but the changes proposed by RBS are less drastic than the initial proposals from Barclays.
The government owns 70% of RBS, but UKFI, the body that oversees all government-owned financial institutions, has already stated that it will not interfere with pension schemes. RBS, along with Lloyds and HBOS, will be conscious that the government wants to make a profit when it sells off its stakes and so any cost cutting measures could be seen as aiding this – the measures RBS is taking could reportedly save it upwards of £500m. Having said that, research by Watson Wyatt in the US recently suggested that scheme closures did not have any real positive effects on company share prices.
RBS takes measures to reduce DB costs - Pensions Week
Royal Mail Pension Plan (RMPP)
| Active scheme members | 167,311 |
| Total scheme members | 451,867 |
| Capital value (£m) | £23,400m |
| Deficit (£m) | Believed to be in excess of £10bn |
| Closed to new members | 2008 |
While the government was looking to privatise part of the Royal Mail, the pension scheme was a sticking point for potential investors. The government has admitted that it would not leave the plan fully funded if a deal is finally agreed to sell part of Royal Mail to a private company.
Industry estimates say that the deficit could reach £10bn by the time the next review is published later this year. Jane Newell, chairman of RMPP’s trustee board, wrote to Lord Mandelson in February this year urging the government to step in and aid a deficit recovery plan. She added that Royal Mail itself could not fund such a deficit as it was “balance sheet insolvent”.
Closure threat looms over Royal Mail fund - Pensions Week
Steria
The IT services firm is making changes to its DB scheme, but few details are known.
TRW (UK) Pension Scheme
| Active scheme members | 3,377 |
| Total scheme members | 57,676 |
| Capital value (£m) | £3,500m |
| Deficit (£m) | £500m |
| Closed to new members | Consulting |
| Closed to future accrual | Consulting |
| Reason for 2009 closure | Safeguard existing benefits |
| Replacement scheme | unknown |
TRW, a US-based manufacturer of car parts and transport technology and one of the biggest employers in the West Midlands, is proposing to close its UK scheme to new members and future accruals.
The firm’s HR director, Graham Plumley, told a manufacturing trade publication: “This is an extraordinary step following the unprecedented global financial crisis. It is the duty of the trustee board and the company to take all appropriate actions to safeguard the benefits that have already been accrued by both our current and former employees.”
Roy Middleton, secretary to the trustees, added that the scheme needed to focus on honouring commitments related to all contributions received and benefits so far accumulated by members.
TT Electronics Pension Scheme
| Active scheme members | 1,106 |
| Total scheme members | 6,840 |
| Capital value (£m) | £274m |
| Deficit (£m) | unknown |
| Reason for 2009 closure | n/a; capped pensionable salary |
The Surrey-based electronics firm is extending a freeze on pensionable salaries for a further two years, which could save it around £1.2m a year.
Electronics firm extends salary freeze - Pensions Week
